Bud 


..Lit.. 


[REVISED] 


[UNIFORM  CLASSIFICATION  OF  ACCOUNTS 


Bus.  Admin. 
Lib. 


FOR 


WATER  CORPORATIONS 


PRESCRIBED  BY  THE 


OF  THE 


STATE  OF  CALIFORNIA 


EFFECTIVE  JANUARY  1,  1920 


SAN  FRANCISCO,  CALIFORNIA 


STATK    PKINTINi;    OKFKT 
SACRAMENTO 
1919 


THE  LIBRARY 


THE  UNIVERSITY 


OF  CAL  [FORNIA 


LOS  ANGELES 


UNlVEPSItg  <        — 
LIBRA 

UOS   ANGELES 


Graduate  Se*-ol  of 

University  of  California 
Los  Angeles  24,  California 


RAILROAD  COMMISSION  OF  CALIFORNIA. 


EDWIN  O.  EDGEBTON,  President Commissioner 

H.  D.  LOVELAND Commissioner 

FRANK  R.  DEVLIN Commissioner 

HARLEY   W.    BBUNDIGE Commissioner 

IBVING  MABTIN  Commissioner 

W.  R.  WILLIAMS,  Secretary.  , 


'  / 

[REVIS>,_. 

UNIFORM  CLASSIFICATION  OF  ACCOUNTS 


FOR 


WATER  CORPORATIONS 


PRESCRIBED  BY  THE 


RAILROAD  COMMISSION 


OF  THE 


STATE  OF  CALIFORNIA 


EFFECTIVE  JANUARY  1,  1920 


bAN   FRANCISCO,  CALIFORNIA 


CALIFORNIA   STATE  PRINTING   OFFICE 

SACRAMENTO 

1810 

48*5 


Bus.  Admin. 
Library 


5686 
W3CI 


UNIfORM  CLASSIflCATION  OF  ACCOUNTS  fOR  WATER 
CORPORATIONS. 


Approved  October  25,  1912. 
To  All  Water  Corporations: 

This  uniform  system  of  accounts  for  water  corporations  is  established 
c 

iju  and  issued  by  the  Railroad  Commission  of  the  State  of  California  in 
accordance  with  provisions  of  section  48  of  law  of  1911,  known  as  the 
"Public  Utilities  Act,"  in  effect  March  23,  1912. 

Section  48.  ' '  The  Commission  shall  have  power  to  establish  a  system 
of  accounts  to  be  kept  by  the  public  utilities  subject  to  its  jurisdiction, 
or  to  classify  said  public  utilities  and  establish  a  system  of  accounts 
for  each  class,  and  to  prescribe  the  manner  in  which  such  accounts  shall 
be  kept.  It  may  also  in  its  discretion  prescribe  the  forms  of  accounts, 

*  \^") 

records  and  memoranda  to  be  kept  by  such  public  utilities,  including 
the  accounts,  records  and  memoranda  of  the  movement  of  traffic  as  well 
as  the  receipts  and  expenditures  of  moneys,  and  any  other  forms, 
records  and  memoranda  which  in  the  judgment  of  the  Commission  may 
be  necessary  to  carry  out  any  of  the  provisions  of  this  act.  The  system 

*<•  of  accounts  established  by  the  Commission  and  the  forms  of  accounts, 
records  and  memoranda  prescribed  by  it  shall  not  be  inconsistent,  in 
the  case  of  corporations  subject  to  the  provisions  of  the  act  of  congress 
entitled  'An  act  to  regulate  commerce,'  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  and  the  acts  amendatory  thereof 
and  supplementary  thereto,  with  the  systems  and  forms  from  time  to 
time  established  for  such  corporations  by  the  Interstate  Commerce 

-_;  Commission,  but  nothing  herein  contained  shall  affect  the  power  of  the 
Commission  to  prescribe  forms  of  accounts,  records  and  memoranda 
covering  information  in  addition  to  that  required  by  the  Interstate 
Commerce  Commission.  The  Commission  may,  after  hearing  had  upon 
its  o\vn  motion  or  upon  complaint,  prescribe  by  order  the  accounts  in 
which  particular  outlays  and  receipts  shall  be  entered,  charged  or 
credited.  Where  the  Commission  has  prescribed  the  forms  of  accounts, 
records  or  memoranda  to  be  kept  by  any  public  utility  for  any  of  its 
business,  it  shall  thereafter  be  unlawful  for  such  public  utility  to  keep 
any  accounts,  records  or  memoranda  for  such  business  other  than  those 
so  prescribed,  or  those  prescribed  by  or  under  the  authority  of  any  other 
state  or  of  the  United  States,  excepting  such  accounts,  records  or  memo- 
randa as  shall  be  explanatory  of  and  supplemental  to  the  accounts, 
records  or  memoranda  prescribed  by  the  Commission." 

2-48885 


CLASSIFICATION   OP   ACCOUNTS,   WATER   CORPORATIONS. 

Section  1.  (x)  "The  term  'Water  Corporation'  when  iised  in  this 
act,  includes  every  corporation  or  person,  their  lessees,  trustees,  receivers 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  water  system  for  compensation  within  this 
State." 

For  the  purpose  of  this  system  of  accounts,  water  corporations  are 
divided  into  three  classes  as  follows : 

Class  A — Corporations  having  average  annual  operating  reve- 
nues exceeding  $100,000.00. 

Class  B — Corporations  having  average  annual  operating  reve- 
nues less  than  $100,000.00,  and  more  than  $25,000.00. 

Class  C — Corporations  having  average  annual  operating  reve- 
nues less  than  $25,000.00. 

Any  corporation  in  Classes  B  and  C  may  keep  the  more  extended 
division  or  subdivision  of  any  or  all  the  accounts  shown  herein;  if 
desired,  further  refinements  or  extensions  of  the  scheme  of  accounts  to 
meet  the  needs  of  individual  corporations  may  be  made  by  subdividing 
the  accounts  herein  established,  provided  that  the  integrity  of  the 
accounts  is  not  impaired  and  that  the  titles  and  purposes  of  any  accounts 
so  raised  shall  first"  be  filed  with  the  Railroad  Commission. 

All  accounts  shall  be  kept  by  the  double-entry  method  by  all  corpora- 
tions or  persons  within  the  scope  of  this  order.  This  requirement, 
however,  is  not  intended  to  apply  to  purely  statistical  accounts. 

The  first  entry  relating  to  anything  for  which  a  charge  or  a  credit 
is  made  to  any  fixed  capital  or  investment  account  shall  describe  the 
property  in  respect  of  which  the  entry  is  made  with  such  fullness  and 
particularity  as  to  enable  its  identification. 

All  charges  made  to  fixed  capital  or  other  property  account  with 
respect  to  any  property  acquired  on  or  after  January  1,  1913,  shall  be 
the  actual  money  costs  of  the  property.  When  the  consideration  given 
and  for  which  a  charge  is  made  to  any  fixed  capital  or  other  property 
account  is  anything  other  than  money,  the  actual  consideration  shall  be 
fully  described  in  the  entry,  to  enable  identification,  and  the  amount 
charged  shall  be  the  actual  money  value  of  the  consideration  at  the  time 
of  the  transaction. 

Discounts  upon  securities  and  other  commercial  papers  issued  are  to 
be  provided  for  in  other  accounts  and  must  in  no  case  be  included  as 
part  of  the  cost  of  any  property  acquired. 

The  figures  and  letters  prefixed  to  the  titles  of  accounts  in  the  follow- 
ing definitions  and  instructions  are  solely  for  convenience  of  reference, 
and  are  not  to  be  considered  as  part  of  the  title  or  definition. 


CLASSIFICATION   OF  ACCOUNTS,   WATER   CORPORATIONS.  5 

All  corporations  are  hereby  required  on  and  after  January  1,  1913,, 
to  keep  their  accounts  in  accordance  with  instructions  herein  provided. 

All  corporations  operating  in  more  than  one  incorporated  city  or 
partly  within  and  partly  without  an  incorporated  city,  shall  show 
separate  profit  and  loss  accounts  for  each  incorporated_city ;  and  a  single 
profit  and  loss  account  for  all  territory  not  within  an  incorporated  city. 

All  general  expense  common  to  the  entire  system,  together  with  the 
expenses  and  repairs  of  the  pumping,  distributing  and  transmission 
systems,  shall  be  treated  as  common  to  the  entire  system  and  prorated 
to  the  several  incorporated  cities  or  other  territory  on  some  equitable 
basis  in  accordance  with  the  benefits  derived. 

NOTE. — Corporations  will  file  with  the  Commission  a  statement  in  complete  detail 
and  full  explanation  supporting  the  basis  on  which  a  prorate  of  expenses  is  made. 

In  prescribing  this  system  of  accounts,  the  Commission  does  not  bind 
itself  to  approve  any  item  set  out  in  any  account,  either  as  to  amount 
or  character,  for  rate-fixing  purposes  or  when  authorizing  the  issuance 
of  securities.  The  prescribed  system  of  accounts  is  designed  to  set  out 
the  facts  in  connection  with  the  income,  expenditures,  etc.,  and  there- 
from the  Commission  will  determine,  when  engaged  in  fixing  rates  or 
approving  issues  of  securities,  just  what  consideration  shall  be  given  to 
the  various  items  in  the  several  accounts. 

RAILROAD  COMMISSION  OF  THE 
STATE  OF  CALIFORNIA. 

By  CHARLES  R.  DETRICK,  Secretary. 
Date :  October  25,  1912. 
Commercial  Building. 

San  Francisco,  California. 


6  CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS. 

BALANCE  SHEET  ACCOUNTS. 
Definitions  and   Instructions. 

Balance  8lt«l  Accounts  d< fined.  1>\  Balmier  Sheet  Accounts  are 
meant  those  titles  under  \\liich  the  ledger  accoiinls  are  combined  and 
summarized  to  show  the  assets,  liabilities,  and  profit  or  loss  of  the 
business  at  a  given  lime.  Where  the  title  and  definition  of  a  Balance 
Sheet  Account  clearly  indicate  that  it  is  a  summary  of  other  accounts, 
it  is  not  required  that  a  special  ledger  account  shall  be  raised  under 
such  a  title  to  include  the  balance,  from  the  accounts  usually  carried  on 
the  ledger. 

Assets.  The  term  Assets  is  an  accepted  designation  of  the  wealth 
-or  money's  worth,  either  actual  or  nominal,  in  the  possession  or  control, 
or  at  the  disposal  of  the  individuals,  firms,  corporations,  or  govern- 
ments, when  that  wealth  or  money's  worth  is  considered  as  resources 
for  satisfying  the  obligation  of  debtors  to  creditors,  and  those  of 
trustees  to  their  principals;  and  as  a  basis  of  the  property  rights  of 
owners  or  stockholders,  or  as  resources  classified  according  to  their 
character,  their  relation  to  the  principal  purpose  of  the  business  or 
enterprise  in  which  they  are  utilized,  their  form,  or  the  time  when  and 
conditions  under  which  they  become  owned  or  controlled  by  or  at  the 
disposal  of  the  individual,  firm,  corporation  or  government  utilizing 
or  disposing  of  them. 

Corporate  deficit  is  the  excess  of  the  expense  and  deductions  over 
revenue  or  income,  and  represents  the  amount  due  to  the  corporation 
by  its  proprietors,  or  proprietary  interests,  for  the  replacement  of  lost 
invested  capital. 

Liabilities.  In  accounting,  Liabilities  are  primarily  amounts  of 
money  or  quantities  of  other  specified  forms  of  wealth  which  persons, 
firms,  corporations,  or  governments  are  under  obligation  to  pay  or 
deliver,  or  for  whose  custody,  use,  payment,  or  expenditure  they  are 
responsible,  or  amounts  representing  losses  or  depreciation  of  assets 
incurred  but  not  realized. 

Corporate  surplus  is  the  excess  of  revenue  or  income  over  expenses 
and  deductions,  or  portions  of  the  property  rights  or  equity  of  the 
proprietors. 

ASSET  ACCOUNTS. 

1.  FIXED  CAPITAL  INSTALLED  PRIOR  TO  JANUARY  1,  1913. 

In  this  account  (on  the  balance  sheet  statement)  shall  be  shown  the 
total  of  the  balance  in  the  ledger  accounts  representing  the  corpora- 
tion's fixed  capital  which  was  installed  prior  to  January  1,  1913,  and 
which  is  still  in  service  at  date  of  the  balance  sheet.  (See  text  of  this 
account  under  Account  No.  C-29,  "Fixed  Capital  Accounts.") 


CLASSIFICATION  OF  ACCOUNTS,  WATER  CORPORATIONS.  7 

2.  FIXED  CAPITAL  INSTALLED  SINCE  DECEMBER  31,  1912 . 

This  account  is  a  summary  of  the  accounts  representing  the  corpora- 
tion's fixed  capital  installed  since  December  31,  1912,  and  should  show 
the  cost  of  the  fixed  capital  which  has  been  installed  since  that  date 
and  is  still  in  service  at  the  date  of  the  balance  sheet.  (For  primary 
fixed  capital  accounts  see  Accounts  C-l  to  C-4,  " Intangible  Capital," 
and  Accounts  C-5  to  C-28,  "Tangible  Capital  Accounts.") 

3.  CASH  AND  DEPOSITS. 

A.  Cash.     Charge  to  this  account  the  amount  of  current  funds  avail- 
able for  use  on  demand  in  the  hands  of  financial  officers  and  agents, 
or  deposited  in  banks  or  with  trust  companies,  and  cash  in  transit  for 
which  agents  receive  current  credit. 

B.  Special  Deposits.     Charge  to  this  account  special  deposits  to  pay 
declared  dividends  or  matured  interest,  cash  realized  from  the  sale  of 
securities   held   for  disbursement   when   the   purposes   for   which   the 
securities  are  sold  are  accomplished;  special  deposits  other  than  in 
sinking  funds  for  the  payment  of  debts  and  interest,  not  matured; 
also   money   and  securities   deposited   to   secure   the   performance   of 
contracts,   and  other   deposits   of  a  special  nature  not  provided  for 
elsewhere. 

4.  NOTES  RECEIVABLE. 

Charge  to  this  account  the  cost  of  all  collectible  obligations  in  the 
form  of  Notes  Receivable  or  other  similar  evidences  of  money  receivable 
on  demand  or  within  a  time  not  exceeding  one  year.  This  does  not 
include  interest  coupons.  Time  loans  that  mature  more  than  one  year 
after  date  of  issue  shall  be  considered  as  investments  and  shall  not  be 
included  in  this  account. 

5.  ACCOUNTS  RECEIVABLE. 

Charge  to  this  account  all  amounts  owing  to  the  corporation  upon 
accounts  with  solvent  concerns  other  than  banks,  also  the  cost  of  all 
accounts  and  claims  (except  notes  or  negotiable  bills)  upon  which 
responsibility  is  acknowledged  by  solvent  concerns  or  which  are  suffi- 
ciently secured  to  be  considered  good,  and  of  all  judgments  against 
solvent  concerns  where  the  judgment  is  not  appealable  or  suspended 
through  appeal. 

The  following  sub-accounts  are  provided : 

A.  Accounts  with  System  Corporations.  Include  in  this  account 
amounts  due  from  proprietary,  affiliated,  controlled,  and  controlling 
corporations  on  open  accounts  other  than  those  provided  for  in  Account 
No.  8-B,  "Advances  to  System  Corporations  for  Construction,  Equip- 
ment and  Betterments." 

3—48885 


8  CLASSIFICATION   OP   ACCOUNTS,   WATER   CORPORATIONS. 

B.  Due    from    Consumers    and    Agents.     Include    in    this    account 
amounts  due  from  consumers  and  agents  for  services  rendered  or  billed. 

NOTE. — Accounts  with  consumers  and  agents  shall  be  kept  in  such  manner  as  will 
enable  corporations  to  show  amounts  due  from  consumers  and  agents  for  current 
accounts,  for  delinquent  accounts,  and  amounts  due  from  consumers  whose  service 
has  been  suspended. 

C.  Miscellaneous    Accounts    Receivable.     Include    in    this    account 
amounts    due    from    employees    for    working    funds    advanced,    and 
amounts  due  from  miscellaneous  debtors  upon  open  accounts  considered 
collectible. 

6.  INTEREST  AND  DIVIDENDS  RECEIVABLE  . 

Charge  to  this  account  all  interest  considered  collectible  accrued  but 
not  yet  collected  upon  bonds,  notes  or  other  commercial  paper,  held  by 
or  for  the  benefit  of  the  corporation ;  all  dividends  declared  or  guar- 
anteed by  solvent  concerns  but  not  yet  collected,  the  right  to  which  is 
in  the  corporation. 

7.  OTHER  CURRENT  ASSETS. 

Charge  to  this  account  the  cost  of  all  current  assets  which  are  not 
includible  under  any  of  the  foregoing  accounts.  By  Current  Assets 
are  meant  only  those  things  that  are  readily  convertible  into  money 
and  which  are  held  not  as  investments,  but  with  the  intent  of  being 
presently  converted  into  money. 

8.  INVESTMENTS. 

This  account  includes  the  cost  of  all  properties  acquired  or  held  not 
for  use  in  present  operations,  but  as  a  means  of  obtaining  and  exer- 
cising control  over  other  corporations,  or  for  income  to  be  derived  from 
them,  or  for  a  rise  in  value,  or  for  devotion  to  future  operations,  and 
for  securing  other  business  advantages  that  may  seem  possible  through 
their  acquisition  and  possession. 

It  is  subdivided  as  follows: 

A.  Securities  of  Other  Corporations.  Include  in  this  account  the  cost 
of  stocks  and  bonds  and  other  evidences  of  indebtedness  issued  by  other 
companies.  This  account  does  not  include  any  stocks,  bonds,  or  other 
evidences  of  indebtedness  issued  or  assumed  by  the  accounting  corpora- 
tion. Class  A  corporations  will  subdivide  this  account  so  as  to  show 
separately  the  cost  of 

a.  Stocks  of  System  Corporations. 

&.  Funded  Debt  of  System  Corporations. 

c.  Miscellaneous  Stocks. 

d.  Miscellaneous  Bonds. 

NOTE. — In  the  annual  reports  to  the  Railroad  Commission,  investments  will  be 
required  to  be  classified  so  as  to  show  those  held  subject  to  a  lien  of  some  character 
and  those  held  free  of  all  lien  or  pledge. 


CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS.  9 

B.  Advances  to  System  Corporations  for  Construction,  Equipment 
and  Betterments.     Include  in  this  account  advances  to  proprietary, 
affiliated,  controlled  and  controlling  corporations  to  enable  such  corpo- 
rations to  pay  for  construction,  equipment,  additions,  and  betterments, 
when  such  advances  are  of  a  permanent  nature  (i.  e.,  where  there  is  not 
an  understanding  that  the  advances  are  to  be  repaid  within  one  year) 
or  when  it  is  understood  and  intended  that  reimbursement  shall  be 
made  by  the  issue  of  the  securities  of  the  debtor  corporation. 

NOTE. — Temporary  advances  on  open  accounts  to  system  corporations  and  such 
advances  for  purposes  other  than  construction,  equipment,  additions  and  betterments 
shall  be  included  in  accounts  receivable. 

C.  Miscellaneous   Investments.     Include    in   this   account   all   other 
investments   of   a   permanent  nature   in  intangibles  and  in   physical 
property  not  held  for  the  operation  of  the  company's  plant  as  a  water 
system. 

NOTE. — In  the  annual  reports  to  the  Railroad  Commission,  investments  will  be 
required  to  be  classified  so  as  to  show  those  held  subject  to  a  lien  of  some  character 
and  those  held  free  of  all  lien  or  pledge. 

9.  MATERIALS  AND  SUPPLIES  . 

Charge  to  this  account  the  cost  (including  transportation)  of  all 
materials  and  supplies  acquired,  and  the  value  of  discarded  equipment 
and  of  equipment,  materials,  and  supplies  returned  to  store,  regardless 
of  whether  the  same  are  intended  to  be  consumed  in  construction  or  in 
operation,  or  later  to  be  sold.  Where  discounts  recovered  through 
prompt  payment  are  not  credited  to  the  particular  bills,  the  cost  at 
which  such  materials  and  supplies  shall  be  charged  shall  be  the  invoice 
cost,  and  any  discounts  recovered  through  prompt  payment  of  bills  for 
such  materials  and  supplies  shall  be  credited  to  Account  No.  C— 20, 
"Interest  During  Construction,"  or  to  Account  No.  E-45,  "Undis- 
tributed Adjustments-Balance,"  according  as  such  materials  and  sup- 
plies are  intended  for  construction  or  for  operation. 

When  the  use  of  any  tangible  fixed  capital  is  discontinued  it  shall  be 
treated  as  retired;  the  original  cost  of  such  capital  shall  be  credited  to 
the  fixed  capital  account  in  which  carried,  and  its  value,  if  any,  as 
second-hand  material  or  junk  shall  be  charged  to  this  account,  or  an 
appropriate  sub-account.  If  such  value  is  not  known  and  can  not 
readily  be  determined,  it.  shall  be  estimated,  and  errors  in  such  estimates, 
when  determined,  shall  be  adjusted  through  the  accounts  involved 
during  the  year  in  which  the  estimates  were  made;  if  later,  then  through 
the  "Corporate  Surplus  or  Deficit"  account. 

Inventories  of  materials  and  supplies  shall  be  taken  at  least  annually, 
and  any  shortages  or  overages  disclosed  by  such  inventories  shall  be 
credited  or  debited  to  this  account  and  debited  or  credited  to  Account 
No.  E-48,  "Undistributed  Adjustments-Balance,"  or  to  Clearing 


10  CLASSIFICATION   OF  ACCOUNTS,   WATER   CORPORATIONS. 

Account  No.  4,  "Supply  Expense"  (if  that  account  is  used),  in  case 
such  shortages  or  overages  can  not  be  assigned  to  specific  accounts. 
Shortages  may,  however,  be  charged  directly  to  ' '  Corporate  Surplus  or 
Deficit."  Where  materials  and  supplies  from  stores  have  been  used 
in  construction,  and  it  is  estimated  that  part  of  the  shortage  or  overage 
is  due  to  such  materials  and  supplies  having  been  actually  applied  to 
construction,  a  proper  proportion  of  the  inventory  shortage  or  overage 
should  be  charged  or  credited  to  Account  No.  C— 25E,  "Miscellaneous 
Construction  Expenditures,"  directly  or  through  Clearing  Account 
No.  4,  "Supply  Expense." 

10.  SINKING  FUNDS  . 

Charge  to  this  account  the  amount  of  cash  and  the  cost  of  live  securi- 
ties in  the  hands  of  trustees  of  sinking  and  other  funds  for  the  purpose 
of  redeeming  outstanding  obligations.  A  separate  account  shall  be 
raised  for  each  sinking  fund. 

11.  OTHER  SPECIAL  FUNDS. 

Charge  to  this  account  the  amount  of  cash  and  the  cost  of  securities 
held  in  trust  by  or  for  the  corporation  in  insurance  funds,  pension 
funds,  hospital  funds,  and  other  similar  special  funds  not  provided  for 
in  the  preceding  accounts.  A  separate  account  shall  be  raised  for  each 
fund. 

NOTE. — Securities  issued  or  assumed  by  the  corporation  may  be  included  among 
the  assets  of  special  funds  only  when  they  represent  the  actual  investment  of  funds 
held  in  trust  and  when  the  fund  so  held  would  share  in  the  distribution  of  assets 
covered  by  the  securities  in  case  of  foreclosure  or  dissolution. 

12.  TREASURY  SECURITIES. 

Charge  to  this  account  the  par  value  of  all  stocks  and  bonds  which 
have  been  authorized  and  issued  by  the  corporation  or  assumed  by  it 
and  held  by  the  Treasurer  or  other  fiscal  agent  of  the  corporation  for 
its  benefit.  When  such  securities  are  sold  their  par  value  shall  be 
credited  to  this  acount. 

13.  PREPAID  EXPENSES. 

A.  Prepaid  Rents.     Charge  to  this  account  the  amount  of  rents  paid 
in  advance  of  the  enjoyment  of  the  term.     As  the  term  is  consumed, 
credit  this  account  at  monthly  intervals  and  debit  the  appropriate  rent 
account  with  the  amount  applicable  to  the  month. 

B.  Prepaid  Taxes.     Charge  to  this  account  the  excess  of  taxes  paid 
over  the  amount  properly  chargeable  to  Income  or  other  accounts  as 
shown  by  the  debit  balance  in  the  Tax  Liability  account.     (See  Account 
No.  26,  "Taxes  Accrued.") 


CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS.  11 

C.  Prepaid  Insurance.     When  premiums  on  insurance  policies  are 
paid  in  advance  of  their  accrual,  the  amount  prepaid  shall  be  charged 
to  this  account.     As  such  premiums  accrue,  they  shall  be  credited  at 
monthly   intervals   to   this   account   and   charged   to   the   appropriate 
expense  account. 

D.  Other  Prepayments.     When  prepayments  are  made  for  anything 
other  than  as  provided  for  in  the  three  preceding  accounts,  the  amount 
of  such  prepayments  shall  be  included  in  this  account. 

14.  UNAMORTIZED  DISCOUNT  ON  SECURITIES  AND  EXPENSE. 

When  capital  stock,  funded  debt  securities  and  other  evidences  of 
indebtedness  are  disposed  of  for  a  consideration  whose  cash  value  is 
less  than  the  sum  of  the  par  value  of  the  securities  or  other  evidences 
of  indebtedness  and  the  interest  thereon  accrued  at  the  time  the 
transfer  takes  place,  the  excess  of  such  sum  of  the  par  value  and 
accrued  interest  over  the  cash  value  of  the  consideration  received  shall 
be  charged  to  this  account.  To  this  account  shall  also  be  charged  all 
expense  connected  with  the  issue  and  sale  of  evidences  of  debt,  such 
as  fees  for  drafting  mortgages  and  trust  deeds,  fees  and  taxes  for 
recording  mortgages  and  trust  deeds;  cost  of  engraving  and  printing 
bonds,  certificates  of  indebtedness,  and  other  commercial  paper  having 
a  life  of  more  than  one  year;  fees  and  commissions  paid  underwriters 
and  brokers  for  marketing  such  evidences  of  debt,  and  other  like 
expense.  At  or  before  the  close  of  each  fiscal  period  thereafter,  a 
proportion  of  such  discount  and  expense  on  securities  representing 
indebtedness  based  upon  the  life  of  the  security  to  maturity  shall  be 
credited  to  this  account  and  charged  to  Account  No.  109,  "Amortiza- 
tion of  Debt  Discount  and  Expense."  Such  discount  and  expense  may, 
if  desired,  be  amortized  more  rapidly  through  charges  of  all  or  any 
part  of  it,  either  at  the  time  of  issue  or  later,  to  Account  No.  114-fr, 
"Other  Deductions  from  Surplus." 

15.  OTHER  SUSPENSE. 

This  account  includes  all  debits  not  elsewhere  provided  for  and  the 
proper  final  disposition  of  which  is  uncertain.  It  will  include  all  such 
matters  as  expense  of  preliminary  surveys,  plans,  investigations,  etc., 
made  for  determining  the  feasibility  of  projects  under 'contemplation. 
Should  any  such  project  later  be  carried  to  completion,  such  amounts 
shall  be  credited  to  this  account  and  charged  to  the  proper  capital 
account  or  accounts;  should  it  be  abandoned,  such  amounts  shall  be 
charged  to  "Corporate  Surplus  or  Deficit." 

When  the  proper  disposition  of  any  matter  charged  to  this  account 
is  determined,  it  shall  be  credited  to  this  account  and  charged  to  the 
appropriate  account  or  accounts. 


12  CLASSIFICATION  OF  ACCOUNTS,  WATER  CORPORATIONS. 

16.  CONSTRUCTION  WORK  IN  PROGRESS: 

In  this  account  may  be  included  amounts  expended  upon  plant  that 
is  in  process  of  construction  under  estimates  or  work  orders  but  is  not 
ready  for  service  at.  the  date  of  the  balance  sheet.  It  includes,  also, 
such  proportion  of  plant  supervision  expenses,  engineering  expenses. 
tool  expenses,  supply  expenses,  and  general  expenses  as  may  be  properly 
chargeable  to  the  construction  work  included  under  this  account. 

When  the  work  is  completed  on  any  job,  the  cost  of  which  has  been 
included  in  this  account,  the  sub-account  covering  that  job  shall  be 
credited  with  the  amount  at  which  it  stands  charged,  and  the  appro- 
priate fixed  capital  or  other  accounts  shall  be  concurrently  charged; 
but  in  no  case  shall  any  expenditure  be  carried  in  this  account  after 
the  work  is  completed. 

17.  CORPORATE  DEFICIT  . 

Under  this  head  should  be  shown  the  debit  balance,  if  any,  in  the 
"Corporate  Surplus  or  Deficit  Account." 

LIABILITY  ACCOUNTS. 

18.  CAPITAL  STOCK. 

To  this  account  should  be  credited  the  par  value  of  the  capital  stock 
issued  and  outstanding,  including  any  that  may  be  in  the  corporation 's 
treasury,  or  held  in  trust  for  it,  or  in  sinking  or  other  funds. 

19.  INSTALLMENTS  ON  STOCK  SUBSCRIPTION. 

To  this  account  should  be  credited  the  amounts  received  for  capital 
stock  to  be  .paid  for  in  installments,  until  such  stock  is  issued. 

20.  FUNDED  DEBT  . 

A  separate  account  shall  be  opened  for  each  mortgage,  note,  or  other 
lien  or  security.  The  entry  in  any  account  shall  show  the' purpose  for 
which  funded  debt  is  issued  and  shall  make  intelligible  reference  to 
the  book,  page,  and  account  wherein  are  shown  any  discount  or  premium- 
realized  on  the  amount  issued  or  assumed. 

If  the  consideration  received  for  the  indebtedness  is  other  than  money 
the  entry  shall  show  to  whom  issued  and  shall  describe  with  sufficient 
particularity  to  identify  the  actual  consideration  received. 

If  the  issue  in  any  case  is  to  an  agent  of  an  undisclosed  principal, 
the  name  and  address  of  agent  and  the  fact  of  his  agency  must  be 
shown  in  the  entry;  also  short  time  securities  or  notes  and  mortgages 
payable  which  are  due  at  a  date  over  one  year  in  the  future. 

21.  RECEIVER'S  CERTIFICATES. 

When  any  receiver  acting  under  the  orders  of  a  court  of  competent 
jurisdiction  is  in  possession  of  the  property  of  the  corporation  and 


CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS.  13 

under  the  orders  of  such  court  issues  certificates  of  indebtedness  charge- 
able upon  such  property,  the  par  value  of  such  certificates  shall  be 
credited  to  this  account.  Interest  accruing  upon  such  certificates  shall 
also  be  credited  monthly  to  this  account. 

22.  ADVANCES  FROM  SYSTEM  CORPORATIONS  FOR  CONSTRUCTION,  EQUIP- 

MENT AND  BETTERMENTS. 

Credit  this  account  with  advances  from  proprietary,  affiliated, 
controlled  and  controlling  corporations  to  enable  the  accounting  corpo- 
ration to  pay  for  construction,  equipment,  additions  and  betterments 
when  such  advances  are  of  a  permanent  nature  (i.  e.,  where  there  is  not 
an  understanding  that  the  advances  are  to  be  repaid  within  one  year) 
or  when  it  is  understood  and  intended  that  a  reimbursement  shall  be 
made  by  the  issue  of  the  securities  of  the  debtor  corporation. 

NOTE. — Temporary  advances  on  open  accounts  for  system  corporations  and  such 
advances  for  purposes  other  than  construction,  equipment,  additions  and  betterments 
shall  be  included  in  accounts  payable. 

23.  NOTES  PAYABLE. 

When  any  note  or  draft  which  matures  not  later  than  one  year  after 
date' of  issue  or  of  demand  is  issued  or  the  primary  liability  thereon 
assumed  by  the  corporation,  the  par  value  thereof  shall  be  credited  to 
this  account  and  when  it  is  paid  it  shall  be  charged  to  this  account  and 
credited  to  "Cash"  or  other  suitable  account  except  secured  notes 
proper  to  be  included  in  Account  No.  20,  "Funded  Debt." 

24.  ACCOUNTS  PAYABLE. 

A.  Accounts  with  System  Corporations.     Credit  to  this  account  the 
amounts  owing  to  proprietary,  affiliated,  and  controlled  or  controlling 
corporations  on  open  accounts  other  than  those  provided  for  in  Account 
No.  22,  "Advances  from  System  Corporations  for  Construction,  Equip- 
ment and  Betterments." 

B.  Audited  Vouchers  and  Wages  Unpaid.     Credit  to  this  account  the 
amount  of  audited  vouchers  or  accounts,  and  audited  pay  rolls  unpaid 
on  the  date  of  the  balance  sheet.     Include  also  the  amount  of  unclaimed 
wages  and  outstanding  pay  and  time  checks  issued  in  payment  of  wages. 

C.  Consumer's  Deposits.     Credit  to  this  account  as  such  deposits  are 
made  all  cash  deposited  with  the  corporation  by  consumers  for  water 
service  as  security  for  the  payment  of  bills.     Deposits  refunded  should 
be  charged  to  this  account  and  credited  to  cash.     Deposits  applicable 
to  uncollectible  water  bills  should  be  credited  to  the  account  of  the 
consumer  and  debited  to  this  account. 


14  CLASSIFICATION   OP  ACCOUNTS,   WATER   CORPORATIONS. 

D.  Miscellaneous  Accounts  Payable.  Credit  to  this  account  all 
amounts  owing  to  miscellaneous  creditors  on  open  accounts  and  not 
provided  for  elsewhere. 

25.  INTEREST  ACCRUED. 

Credit  to  this  account  at  the  close  of  each  month  the  interest  accrued 
during  the  month  upon  the  interest-bearing  indebtedness,  issued  or 
assumed  by  the  corporation,  except  interest  on  judgments  and  receivers' 
certificates.  When  such  interest  is  paid  it  should  be  charged  to  this 
account  and  credited  to  "Cash"  or  other  suitable  account.  The  interest 
accruing  on  any  judgment  against  the  corporation  or  upon  any 
receivers'  certificates  shall  be  credited  to  the  account  to  which  such 
judgment  or  receivers'  certificates  stand  credited. 

26.  TAXES  ACCRUED  . 

To  this  account  should  be  credited  taxes  that  have  accrued  but  are 
not  yet  due.  The  full  amount  of  taxes  for  the  year  should  be  estimated 
and  charged  equally  (one  twelfth)  to  the  expenses  (Account  No.  E-50) 
of  each  month,  with  corresponding  credit  to  this  account;  as  soon  as  the 
amount  of  the  taxes  for  the  period  is  known,  the  accounts  should  be 
adjusted  to  conform.  When  taxes  become  due  and  are  vouchered,  they 
should  be  charged  to  this  account. 

27.  DIVIDENDS  DECLARED. 

When  any  dividend  is  declared,  the  amount  of  the  dividend  shall  be 
credited  to  this  account  and  here  remain  until  it  is  paid,  when  the 
amount  of  the  payment  shall  be  charged  to  this  account  and  credited 
to  "Cash"  or  other  suitable  account. 
» 

28.  SERVICE  BILLED  IN  ADVANCE  . 

When  bills  are  made  for  water  to  be  furnished  in  future  months,  and 
the  amount  of  the  bills  is  included  in  "Accounts  Receivable,"  but  not 
in  the  revenue  accounts,  the  proportion  of  the  bills  applicable  to  future 
months  shall  be  credited  to  this  account.  As  the  term  for  which  the 
bills  are  made  expires,  the  appropriate  revenue  account  should  be 
credited  and  this  account  debited  with  the  amount  applicable  to  the 

current  month. 

i 

29.  RESERVE  FOR  ACCRUED  DEPRECIATION. 

Credit  to  this  account  or  to  appropriate  sub-accounts  such  amounts 
as  are  concurrently  charged  to  Account  No.  E— 52,  "Depreciation  of 
Plant  and  Equipment."  Charge  to  this  account  or  to  appropriate  sub- 
accounts  (except  as  prescribed  in  the  notes  hereunder)  the  reali/ed 
depreciation  in  the  several  classes  of  tangible  fixed  capital;  that  is,  the 


CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS.  15 

difference  between  the  original  cost  (estimated  if  not  known)  of  prop- 
erty relinquished,  retired,  or  destroyed,  and  the  value  of  any  salvage 
recovered. 

NOTH  A. — When  any  property  is  retired  which  was  installed  prior  to  the  raising 
of  the  "Reserve  for  Accrued  Depreciation,"  only  such  portion  of  the  realized  deprecia- 
tion shall  be  charged  to  the  reserve  as  is  due  to  life  in  service  after  the  establish- 
~*ent  of  the  reserve  ;  this  portion  may  be  estimated  on  the  basis  of  the  proportion 
-•nich  the  life  in  service  of  the  property  in  question  after  the  establishment  of  the 
•eservo  bears  to  its  entire  life  in  service.  The  remainder  of  the  realized  depreciation 
snail  be  charged  to  Account  No.  114-B,  "Realized  Depreciation  Not  Covered  by 
Reserves,"  unless  the  corporation  has  on  its  books  a  depreciation  reserve  accumulated 
prior  to  the  establishment  of  the  prescribed  depreciation  rules,  in  which  case  such 
other  remainder,  or  so  much  of  it  as  may  be  provided  for,  shall  be  charged  to  such 
other  reserve  account. 

NOTE  B. — When  any  property  is  retired  whose  book  value  has  been  reduced  by 
writing  off  estimated  depreciation,  only  that  part  of  the  realized  depreciation  which 
has  not  already  been  written  off  shall  be  charged  as  above  to  the  "Reserve  for 
Accrued  Depreciation,"  or  Account  No.  114-B,  "Realized  Depreciation  Not  Covered  by 
Reserves." 

NOTE]  C. — When  any  property  is  retired  whose  book  value  is  greater  than  the 
known  or  estimated  cost,  such  excess  shall  be  charged  to  "Corporate  Surplus  or 
Deficit"  and  the  realized  depreciation  shall  be  charged  as  elsewhere  directed. 

NOTE  D. — If  any  property  is  sold  for  more  than  its  original  cost,  the  amount  of 
depreciation,  if  any,  accrued  and  credited  to  a  reserve  in  respect  thereof,  shall  be 
determined  as  accurately  as  possible  and  charged  to  such  reserve.  The  sum  of  the 
amount  so  charged  and  the  excess  of  the  selling  price  over  the  cost  of  the  property 
shall  be  credited  to  Account  No.  115,  "Miscellaneous  Additions  to  Surplus." 

30.  RESERVE  FOR  AMORTIZATION  OF  INTANGIBLE  CAPITAL. 

Credit  to  this  account  such  amounts  as  are  concurrently  charged  to 
Account  No.  111-B,  "Amortization  of  Landed  Capital,"  and  to  Account 
No.  E-51,  "Amortization  of  Franchises  and  Patents."  Charge  to  this 
account  when  any  franchise,  patent,  or  landed  capital  expires  or  is 
relinquished,  the  amount  at  which  it  stood  charged  in  the  corporation's 
fixed  capital  accounts,  or  such  amount  as  has  been  previously  credited 
to  this  reserve  in  respect  of  such  capital  if  the  amortization  has  not 
been  fully  accomplished.  That  portion  of  its  cost  which  has  not  been 
covered  by  credits  to  the  reserve  or  previously  written  off  shall  be 
charged  to  "Corporate  Surplus  or  Deficit"  account  as  "Amortization 
Unprovided  for  Elsewhere." 

31.  UNAMORTIZED  PREMIUM  ON  DEBT. 

When  funded  debt  securities  or  other  evidences  of  indebtedness 
issued  or  assumed  by  the  corporation  are  disposed  of  for  a  considera- 
tion whose  cash  value  is  greater  than  the  sum  of  the  par  value  of  such 
securities  or  other  evidences  of  indebtedness  and  the  interest  thereon 
accrued  at  the  time  the  transfer  takes  place,  the  excess  of  the  cash  value 
of  such  consideration  received  over  the  sum  of  the  par  value  of  the 
securities  or  other  evidence  of  indebtedness  and  the  accrued  interest 
shall  be  credited  to  this  account.  At  monthly  intervals  thereafter  a 
proportion  of  such  premium  based  upon  the  life  to  maturity  of  the 
security  or  other  evidence  or  maeDteaness  snail  be  charged  to  this 
account  and  credited  to  Account  No.  1.10,  "Amortization  of  Premium 
on  Debt — Cr."  in  the  Income  account. 

4—48885 


16  CLASSIFICATION  OP  ACCOUNTS,  WATER  CORPORATIONS. 

32.  CASUALTY  AND  INSURANCE  RESERVES. 

When  any  admitted  liability  arises  because  of  loss  or  damage  to  the 
property  of  others,  or  of  injuries  to  employees  or  other  persons,  the 
amount  of  the  liability  may  (if  not  previously  provided  for  by  insurance 
or  self -insurance)  be  charged  to  the  appropriate  operating  expense  or 
other  accounts  and  credited  to  this  account,  against  which  (in  such  case) 
the  actual  cost  of  satisfaction  of  the  liability  shall  be  charged  when 
the  matter  is  determined.  If  the  extent  of  the  liability  can  not  be 
ascertained  promptly  after  the  liability  arises,  it  may  be  estimated  as 
accurately  as  practicable  for  the  purpose  of  determining  the  immediate 
charge  to  the  expense  or  other  appropriate  account,  in  which  case  the 
matter  shall  be  adjusted  when  the  extent  of  the  liability  is  definitely 
ascertained.  If  the  lo  s  is  of  such  character  that  it  is  in  whole  or  in 
part  indemnifiable  under  any  contract  of  insurance  carried  by  the 
corporation,  the  indemnifiable  portion  of  the  loss  shall  be  charged  to 
the  insurer  and  credited  to  "Casualty  and  Insurance  Reserves."  Also 
credit  to  this  account  the  amounts  charged  to  operating  expense 
Account  No.  E— 45,  "Insurance,"  to  cover  self-carried  risks. 

33.  INCOME  INVESTED  SINCE  DECEMBER  31,  1912,  IN  FIXED  CAPITAL. 
Credit  to  this  account  such  amounts  from  income  or  surplus  as  are 

definitely  set  aside  to  cover  expenditures  for  extensions  or  improve- 
ments of  the  fixed  capital  cf  the  accounting  corporation ;  such  appro- 
priations include  those  made  discharging  the  principal  (less  the  dis- 
count, if  any,  suffered  at  the  time  of  sale)  of  any  obligation  incurred 
in  the  acquisition  of  any  property  whose  cost  is  carried  in  the  fixed 
capital  accounts.  The  amounts  credited  to  this  account  shall  be  con- 
currently charged  to  "Corporate  Surplus  or  Deficit"  account  as 
"Appropriations  to  Reserves." 

This  account  should  not  include  temporary  appropriations  for  the 
acquisition  of  property  the  cost  of  which  is  intended  later  to  be  met  by 
an  issue  of  securities,  nor  appropriations  for  the  payment  of  obligations 
which  are  intended  to  be  replaced  by  new  issues. 

34.  RESERVES  INVESTED  IN  SINKING  FUNDS  . 

Credit  to  this  account  appropriations  from  surplus  specifically 
invested  or  set  aside  in  the  hands  of  trustees  for  sinking  and  redemption 
funds,  including  accretions  to  such  funds.  (See  explanation  Account 
104-C.) 

35.  OTHER  RESERVES  PROM  INCOME  OR  SURPLUS. 

Credit  to  this' account  all  appropriations  of  income  or  surplus  held 
in  reserve,  other  than  appropriations  invested  in  fixed  capital  since 


CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS.  17 

December  31,  1912,  and  appropriations  invested  in  sinking  or  redemp- 
tion funds.  A  separate  sub-account  shall  be  raised  for  each  reserve,  and 
the  entries  in  such  sub-accounts  will  be  required  to  be  shown  separately 
in  the  annual  report  to  the  Railroad  Commission. 

36.  CORPORATE  SURPLUS  UNAPPROPRIATED  . 

Under  this  head  should  be  shown  the  credit  balance,  if  any,  in  the 
''Corporate  Surplus  or  Deficit"  account. 

FIXED  CAPITAL  ACCOUNTS. 

FIXED  CAPITAL  DEFINED. 

By  the  fixed  capital  of  a  corporation  is  meant  the  property,  both 
tangible  and  intangible,  which  is  devoted  to  the  accomplishments  of 
the  principal  purposes  of  its  business  and  which  has  an  expectation  of 
life  in  service  of  more  than  one  year  from  date  of  installation  in  service 
(exception  being  made  in  the  case  of  hand  tools  and  other  small  port- 
able tools  that  may  be  lost  or  stolen). 

COST  OF  FIXED  CAPITAL. 

The  term  "Cost"  as  used  in  the  texts  for  fixed  capital  accounts 
means  the  original  cost  to  the  corporation.  It  includes  not  only  the 
costs  of  labor,  materials  and  supplies  directly  employed  or  consumed  in 
the  construction  and  installation  of  property  classed  as  fixed  capital, 
but  also  the  cost  of  preliminary  plans  and  surveys  and  such  portion  of 
the  expenses  for  engineering  and  plant  supervision  and  general  expenses 
as  may  be  chargeable  to  the  fixed  capital  accounts  under  an  equitable 
plan  for  the  apportionment  of  such  expenses. 

Intangible  Capital. 

C-l.  ORGANIZATION. 

Charge  to  this  account  all  fees  paid  to  governments  for  the  privilege 
of  incorporation,  and  all  office  and  other  expenditures  incident  to  organ- 
izing the  corporation  or  other  enterprise  and  putting  it  in  readiness  to 
do  business.  This  includes  the  co.st  of  preparing  and  distributing 
prospectuses,  the  cost  of  soliciting  subscriptions  for  stock  (but  not  for 
loans  nor  for  the  issue  of  bonds  or  other  evidences  of  indebtedness), 
cash  fees  paid  to  promoters,  and  the  actual  cash  value  at  the  time  of 
organization  of  securities  paid  to  promoters  for  their  services  in  organ- 
izing the  enterprise ;  counsel  fees ;  cost  of  preparing  and  issuing  cer- 
tificates of  stock,  and  cost  of  procuring  certificates  of  necessity  from 
state  authorities,  and  other  like  costs.  This  account  shall  not  include 
any  discounts  upon  stocks  or  other  securities  issued,  nor  shall  it  include 


18  CLASSIFICATION  OF   ACCOUNTS,   WATER   CORPORATIONS. 

any  costs  incident  to  negotiating  loans  or  selling  bonds  or  other  evidence 
of  indebtedness. 

NOTE. — Costs  incident  to  preparing  and  filing  certificates  of  authorization  of 
incTi-ase  of  capital  stock,  and  to  the  negotiation  and  issue  of  stock  thereunder,  are 
classed  as  additions.  The  cost  of  preparing  and  filing  certificates  of  amendment  of 
articles  of  incorporation  is  classed  as  a  betterment.  The  cost  of  preparing  and  filing 
papers  in  connection  with  the  extension  of  the  term  of  incorporation  or  with  reincorpo- 
ration  consequent  upon  reorganization  shall  be  classed  as  a  renewal. 

C-2.  FRANCHISES  AND  WATER  RIGHTS. 

Charge  to  this  account  the  amount  (exclusive  of  any  tax  or  annual 
charge)  actually  paid  to  the  state,  or  to  a  political  subdivision  thereof, 
as  the  consideration  for  the  grant  of  such  franchise  or  water  right  as  is 
necessary  to  the  conduct  of  the  corporation's  water  operations.  If  any 
such  franchise  is  acquired  by  assignment,  the  charge  to  this  account 
in  respect  thereof  must  ntft  exceed  the  amount  actually  paid  therefor 
by  the  corporation  to  its  assignor. 

Any  excess  of  the  amount  actually  paid  by  the  corporation  over  the 
amount  paid  by  the  original  grantee  to  the  grantor  of  the  franchise 
shall  be  charged  to  Account  No.  4-,  ' '  Other  Intangible  Capital. ' '  If  any 
such  franchise  has  a  life  of  not  more  than  one  year  after  the  date  when 
it  is  first  exercised  by  the  corporation,  it  shall  not  be  charged  to  this 
account  but  to  the  appropriate  accounts  in  operating  expenses  (or  in 
Account  No.  13-D,  "Other  Prepayments,"  if  extending  beyond  the 
fiscal  year). 

NOTE. — Payments  made  to  the  state  or  to  some  subdivision  thereof  as  a  considera- 
tion for  granting  an  extension  for  more  than  one  year  of  the  life  period  of  a  franchise 
are  classed  as  renewals.  Those  made  as  a  consideration  for  franchises  or  extensions 
thereof  covering  additional  territory  to  be  operated  as  part  of  an  existing  system  are 
classed  as  additions.  If  the  franchises  cover  separate  and  distinct  new  plants  the 
payments  therefor  are  classed  as  original  capital.  Annual  or  more  frequent  payments 
in  respect  of  franchises  must  not  be  charged  to  this  account  but  to  the  appropriate  tax 
or  operating  expense  account. 

C-3.  PATENT  RIGHTS. 

Charge  to  this  account  the  cost  of  all  rights  (having  a  life  of  more 
than  one  year  from  the  date  when  placed  in  service)  acquired  by  the 
corporation  in  or  under  valid  patents  granted  by  the  United  States  to 
inventors  for  inventions  and  discoveries  which  are  necessary  to  the 
economical  conduct  of  the  corporation's  water  operations. 

NOTE. — If  a  patent  right  is  extended  to  cover  a  further  period  of  time  than  that 
covered  by  the  original  grant,  the  cost  of  such  extension  is  classed  as  a  renewal.  A 
patent  right  acquired  for  use  in  an  existing  system  and  necessary  to  the  economical 
operation  thereof  is  classed  as  an  addition. 

C-4.  OTHER  INTANGIBLE  CAPITAL. 

Charge  to  this  account  the  cost  of  all  other  intangible  capital  devoted 
to  water  operations.  Entries  of  charges  to  this  account  shall  describe 
the  acquired  property  with  sufficient  particularity  clearly  to  identify  it, 
and  shall  also  show  specifically  the  principal  from  whom  acquired  and 


CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS.  19 

all  agents  representing  such  principal  in  the  transaction ;  also  the  term 
of  life  of  such  property,  estimated  if  not  known,  and  if  estimated,  the 
facts  upon  which  the  estimate  is  based. 

Class  B  and  C  corporations  may  consolidate  these  four  accounts, 
carrying  one  account,  "Intangible  Capital." 

TANGIBLE  CAPITAL. 

C-5.  LANDED  CAPITAL. 

Charge  to  this  account  the  cost  to  the  utility  of  all  lands  used  and 
useful  in  its  water  operation,  embracing  source  of  water  supply  lands, 
pumping  station  land,  purification  land,  rights  of  way  for  transmission 
and  distribution  facilities,  pipe  lines,  and  ditches,  where  such  rights 
have  lives  in  excess  of  one  year  from  the  date  when  such  land  is  placed 
in  service. 

Such  cost  includes,  when  assumed  or  paid  by  the  purchaser  in  its 
own  behalf,  cost  of  registration  of  title,  cost  of  examination  of  title, 
conveyancer's  and  notary's  fees,  purchasing  agent's  fee  or,  commission, 
or  proportion  of  purchasing  agent's  salary,  taxes  accrued  to  date  of 
transfer  of  title,  liens  upon  the  title  acquired,  cost  of  obtaining  consents 
and  payments  for  abutting  damages;  also  assessments  for  betterment 
to  real  estate. 

NOTE  A. — Cost  of  buildings  and  other  improvements  must  not  be  included  in  this 
account. 

NOTE  B. — If  at  the  time  of  acquisition  of  an  interest  in  lands  it  extends  to  building? 
or  other  improvements  thereon,  which  improvements  are  devoted  by  the  corporation 
to  its  water  operations,  and  the  contract  of  acquisition  does  not  determine  the  price 
of  such  improvements,  they  shall  be  appraised  at  their  fair  cash  value  for  use  in  such 
operations,  and  such  appraised  value  shall  be  charged  to  the  appropriate  structures 
account,  and  excluded  from  the  account  "Land  Devoted  to  Water  Operations."  If  sucl: 
improvements  are  not  devoted  to  water  operations  but  are  devoted  to  other  operations 
or  held  as  investments,  the  cost  (or  appraised  value  if  the  cost  is  not  determined  In 
the  contract  of  acquisition)  shall  be  charged  to  the  appropriate  investment  account  or 
capital  account  for  other  operations.  If  the  improvements  are  removed  or  wrecked, 
the  salvage  (less  the  cost  of  removal  or  wreckage)  shall  be  excluded  from  the 
account  "Land  Devoted  to  Water  Operations."  The  entries  in  this  account  must  be 
made  in  such  wise  as  to  enable  the  corporation  to  show  in  its  annual  report  to  the 
Railroad  Commission  the  subdivision  of  the  cost  of  its  land  devoted  to  water  operations 
into  the  following: 

A.  SOURCE  OF  WATER  SUPPLY  LAND. 

B.  PUMPING  STATION  LAND. 

C.  PURIFICATION  LAND. 

D.  RIGHT  OF  WAT. 

E.  GENERAL  OFFICE  AND  OTHER  LANDS. 

C-6.  BUILDINGS,  STRUCTURES  AND  GROUNDS. 

Charge  to  this  account  the  cost  of  all  buildings,  structures  and 
permanent  improvement  of  grounds  used  in  the  production  operation 
of  the  water  utility,  embracing  source  of  water  supply  buildings, 
pumping  station  buildings,  purification  buildings,  and  general  office 
and  other  buildings  and  fixtures. 


20  CLASSIFICATION   OF  ACCOUNTS,  WATER   CORPORATIONS. 

The  following  subaccounts  should  be  raised : 

A.  Source  of  Water  Supply  Buildings  and  Fixtures.     Includes  dwell- 
ings occupied  by  patrolmen,  inspectors,  caretakers  or  other  employees 
engaged  in  the  operation  of  the  source  of  water  supply  facilities,  well 
houses,  pump  houses  and  other  buildings  appurtenant  thereto. 

B.  Pumping  Station  Buildings  and  Fixtures.     Includes  all  buildings 
and  fixtures  devoted  to  the  pumping  of  water. 

C.  Purification  Buildings  and  Fixtures.     Includes  buildings,  fixtures 
and  permanent  improvement  of  grounds  devoted  to  water  purification ; 
roofs  over  reservoirs,  basins,  etc.  should  be  included  in  the  appropriate 
capital  account  as  part  of  cost  of  reservoirs,  basins,  etc. 

D.  General  Office  and  Other  Buildings  and  Fixtures.     Includes  all 
buildings,  fixtures  and  permanent  improvement  of  grounds  devoted  to 
general  offices,  shops,  storehouses,   stables,  garage  and  other  miscel- 
laneous buildings  and  structures  devoted  to  water  utility  operations, 
not  included  in  the  foregoing  accounts. 

NOTE  1. — Where  general  offices,  shops,  storehouses,  stables,  garages,  etc.,  are 
located  in  one  of  the  buildings  under  subaccounts  A,  B  and  C,  no  part  of  the  cost  of 
such  buildings  should  be  charged  to  this  account  (subaccount  D). 

NOTE  2. — The  term  "buildings,  fixtures  and  grounds"  includes :  Structures  of  a 
permanent  character  and  all  fixtures  permanently  attached  thereto,  such  as  water 
pipes  and  fixtures,  pipes  and  fixtures  for  warming  and  ventilating,  gas  pipes  and 
fixtures  for  lighting  purposes,  electric  wiring  and  fixtures  for  lighting,  signalling  and 
elevator  purposes,  and  the  engines  and  motors  especially  provided  for  operating  them ; 
furnaces,  boilers,  etc.,  especially  provided  for  producing  steam  for  such  engines  and 
for  heating ;  electric  generators  especially  provided  for  producing  current  for  lighting 
such  buildings ;  all  brick,  concrete,  iron  or  steel  smokestacks  used  for  heating  or 
power  plant  purposes ;  architect  fees,  excavations,  grading,  walks,  drives,  fences,  walls, 
pavements  and  other  improvements  adjacent  to  such  buildings.  The  cost  of  founda- 
tions and  settings  prepared  especially  for  certain  units  of  equipment  and  designed  to 
last  no  longer  than  such  units  shall  not  be  charged  to  this  account,  but  to  the  account 
to  which  is  charged  the  cost  of  the  equipment  for  which  installed. 

SOURCE  OF  WATER  SUPPLY. 

C-7.  IMPOUNDING  DAMS  AND  RESERVOIRS. 

Charge  to  this  account  the  cost  of  constructing  dams  and  embank- 
ments across  streams  or  canyons  for  impounding  water;  excavated 
reservoirs  used  in  connection  therewith,  together  with  waste  weirs,  gates, 
culverts,  tunnels,  outlet  wash  and  drain  pipes,  valves,  screens  and  all 
equipment  for  operating  valves,  gates,  screens,  etc. 

C-8.  LAKE  AND  RIVER  CRIBS. 

Charge  to  this  account  the  cost  of  constructing  cribs  in  lakes  or  rivers, 
diversion  dams  and  headgates  for  the  purpose  of  collecting  or  diverting 
water  therefrom,  together  with  appurtenant  valves,  screens,  gates, 
grating  and  the  equipment  to  operate  them. 

C-9.  INTAKE  AND  SUCTION  MAINS. 

Charge  to  this  account  the  cost  of  constructing  conduits,  either  pipe 
or  tunnel,  for  conveying  water  by  gravity  or  suction,  from  intake  cribs, 


CLASSIFICATION    OF   ACCOUNTS,   WATER    CORPORATIONS.  21 

springs  and  wells,  or  some  other  form  of  reservoir  where  the  water  is 
temporarily  stored  to  await  purification  or  pumping,  together  with 
appurtenant  equipment,  such  as  gates,  valves,  and  other  apparatus. 

C-10.    WELLS. 

Charge  to  this  account  the  cost  of  sinking  shallow  wells,  open  wells, 
deep  wells,  including  casing  walls,  pits,  together  with  all  waste  and  over- 
flow pipes  and  other  appurtenant  equipment. 

C-ll.  SPRINGS  AND  INFILTRATION  GALLERIES. 

Charge  to  this  account  the  cost  of  constructing  basins,  collecting 
chambers,  etc.,  to  utilize  the  flow  o-f  water  from  springs,  the  cost  of 
constructing  galleries  for  collecting  water  by  infiltration;  and  the  cost 
of  all  equipment  such  as  gates,  valves,  or  other  apparatus  necessary  to 
the  operation  of  such  facilities. 

C-12.  COLLECTING  RESERVOIRS  AND  INTAKE  WELLS. 

Charge  to  this  account  the  cost  of  constructing  reservoirs  or  intake 
wells  for  the  purpose  of  holding  a  supply  of  water  in  readiness  for 
purification  or  pumping,  including  gates,  valves,  inlet,  outlet,  drain 
and  flush  pipes  and  other  appurtenant  equipment. 

C-13.  CANALS  AND  CONDUITS. 

Charge  to  this  account  the  cost  of  constructing  canals,  conduits,  and 
aqueducts  for  conveying  water  from  the  source  of  supply  to  the  purifi- 
cation or  pumping  plant,  including  trestles,  bridges,  culverts,  tunnels, 
main  weirs,  gates,  valves,  screens  and  other  apparatus  necessary  to  the 
operation  of  such  facilities. 

PUMPING  STATION   EQUIPMENT. 

C-14.  PUMPING  EQUIPMENT. 

Charge  to  this  account  the  cost  of  all  equipment  and  apparatus  used 
in  the  pumping  of  water  and  all  processes  performed  upon  it  at  the 
station  up  to  its  delivery  to  the  transmission  or  distribution  mains. 
This  includes  the  cost  of  steam  engines  and  turbines,  hydraulic  power 
equipment,  electric  prime  movers,  gas  engines  and  turbines,  pumps  and 
pump  equipment,  furnaces,  boilers,  their  foundations  and  settings, 
condensers,  vacuum  pumps  and  oiling  systems,  power  transmission 
equipment,  such  as  shafting,  belting,  rope  and  cable  drives,  gearing, 
pulleys,  etc.,  flues  to  the  smokestack  entrance,  feed  pumps,  piping, 
valves  and  all  steam,  hydraulic,  electric  and  gas  power  pumping  equip- 
ment, together  with  necessary  tools  and  appliances. 

NOTE  1. — The  accounting  corporation  may,  if  it  so  desires,  subdivide  this  account, 
under  subaccounts  A,  B,  C,  etc.,  in  order  to  show  the  details  of  cost  of  various  classes 
of  equipment. 

NOTE  2. — The  cost  of  smokestacks  should  not  be  charged  to  this  account,  but  to 
Account  No.  C-6,  B,  "Pumping  Station  Buildings  and  Fixtures." 


22  CLASSIFICATION   OP   ACCOUNTS,   WATER    CORPORATIONS. 

C-15.  MISCELLANEOUS  PUMPING  STATION  EQUIPMENT. 

Charge  to  this  account  the  cost  of  all  miscellaneous  equipment ;  this 
includes  horses,  wagons,  harness,  automobiles,  motorcycles,  bicycles, 
furniture  and  fixtures  (when  not  a  permanent  part  of  buildings,  etc.), 
roads,  trestles,  bridges,  etc. 

PURIFICATION  CAPITAL. 

C-16.  PURIFICATION  SYSTEM. 

Charge  to  this  account  the  cest  of  all  apparatus  and  equipment  used 
for  purification  of  water.  This  includes  settling  basins,  filter  beds, 
mechanical  filters,  and  all  auxiliary  apparatus  for  purifying  water, 
together  with  protecting  structures  erected  in  connection  therewith. 

NOTE. — Regarding  structure.  See  text  of  Account  No.  C-6,  C,  Purification  Buildings 
and  Fixtures. 

TRANSMISSION   AND   DISTRIBUTION   CAPITAL. 

O-17.  TRANSMISSION  MAINS  OR  CANALS. 

Charge  to  this  account  the  cost  of  all  transmission  mains  either  pipes 
or  canals,  used  for  delivering  water  from  the  pumping  station  impound- 
ing reservoir  or  other  source  of  supply  to  the  distribution  reservoirs  or 
mains;  this  includes  the  cost  of  all  trenching  for  pipes  or  canals,  placing 
transmission  main  pipe,  special  castings,  lead  packing,  shut-offs,  man- 
holes, valves  and  the  cost  of  filling  trenches,  and  restoring  the  surface 
of  the  street  to  its  former  condition  as  required  by  the  municipal 
authorities,  canal  excavation,  checks,  drops,  bridges,  spillways,  and 
miscellaneous  canal  structures. 

NOTE. — Transmission  main,  as  distinguished  from  distribution  main,  is  used  for 
conveying  water  to  the  distribution  storage  reservoirs,  tanks,  or  standpipe,  and  has 
no  direct  service  connection  with  consumers  ;  mains  having1  such  connections  will  be 
classed  as  distribution  mains,  or  if  the  distance  between  the  source  of  supply  and 
the  first  direct  service  connection  with  consumers  is  considerable,  the  portion  between 
the  source  of  supply  and  the  first  direct  service  connection  with  consumers  will  be 
classed  as  transmission  main. 

The  cost  of  replacing  paving  disturbed  in  laying  transmission  mains 
shall  be  included  in  a  subaccount. 

NOTE. — On  an  irrigation  system,  the  transmission  is  the  main  canal  from  which 
the  laterals  are  supplied. 

C-18.    DISTRIBUTION  MAINS  OR  CANALS. 

Charge  to  this  account  the  cost  of  all  distribution  mains  either  pipes 
or  canals  in  place.  This  includes  all  mains  or  canals  used  in  the 
distribution  of  water  to  the  beginning  of  the  service  connections,  includ- 
ing the  cost  of  all  trenching,  placing  distribution  main  pipe,  special 
work  and  castings,  lead  packing,  shut-offs,  manholes,  valves  and  t In- 
filling of  trenches  and  restoring  the  surface  of  the  street  to  its  former 
condition  as  required  by  the  municipal  authorities;  also  excavations. 


CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS.  23 

checks,   spillways,    bridges,   waterways,   main   lateral   headgates,    and 
all  structures  in  lateral  canals. 

NOTE. — A  distribution  main  begins  at  the  outlet  valve  of  the  pump,  when  such 
main  has  direct  service  connections  witli  consumers  at  a  relatively  short  distance 
from  the  pumping  station.  If  water  is  pumped  into  a  storage  reservoir,  tank  or  stand- 
pipe  through  a  main  having  no  direct  service  connections  with  consumers,  such  main 
will  be  classed  as  transmission,  and  the  distribution  main  will  begin  at  the  outlet 
valve  of  such  storage  reservoir,  tank  or  standpipe. 

The  cost  of  replacing  paving  disturbed  in  laying  distribution  mains  shall  be  included 
in  a  subaccount. 

C-19.  DISTRIBUTION  RESERVOIRS,  TANKS  AND  STANDPIPES. 

Charge  to  this  account  the  cost  of  constructing  distribution  storage 
reservoirs,  tanks  and  standpipes,  including  appurtenant  equipment, 
such  as  inlet,  outlet,  flush  drains  and  overflow  pipes,  gates,  check  and 
control  valves,  floats,  gauges,  high  water  alarms,  and  all  other  equip- 
ment necessary  to  the  operation  of  such  reservoirs,  tanks  and  stand- 
pipes. 

C-20.  HYDRANTS,  FIRE  CISTERNS,  FOUNTAINS,  ETC. 

Charge  to  this  account  the  corporation's  property  in  all  hydrants,  fire 
cisterns,  basins,  fountains  and  troughs;  this  includes  all  material  in 
place,  the  cost  of  trenching  for  placing  hydrants,  hydrant  connections, 
masonry  and  concrete  in  connection  with  construction  of  basins  and 
cisterns,  and  all  foundations  and  settings  for  fountains  and  troughs  and 
restoring  the  pavement  to  its  original  condition. 

NOTE. — This  account  should  be  segregated  on  the  utilities'  books  under  subaccounts 
A,  B,  etc.,  in  order  to  show  the  cost  of  installing  hydrants,  as  distinguished  from 
cisterns,  troughs,  etc. 

C-21.  SERVICES. 

Charge  to  this  account  the  cost  of  corporation's  property  in  services 
in  or  leading  to  the  consumers'  premises.  This  includes  the  cost  of 
material  in  place,  the  cost  of  trenching  for  placing  services,  service  pipe, 
service  boxes,  stopcocks,  etc.,  and  the  cost  of  filling  the  trenches  and 
restoring  the  surface  to  its  proper  condition. 

C-22.  METERS  AND  MEASURING  DEVICES. 

Charge  to  this  account  the  cost,  including  labor,  of  setting  meters 
used  in  measuring  water  sold  to  consumers,  the  property  of  the  utility. 
This  includes  the  first  cost  of  setting  meters,  measuring  devices,  weirs, 
etc.,  the  first  set  of  meter  fittings,  and  the  connection  in  the  premises  of 
the  consumer,  or  such  portion  of  the  cost  as  is  borne  by  the  utility. 
Also  the  cost  of  all  measuring  devices,  weirs,  etc.,  including  labor  of 
installation,  used  in  the  delivery  of  water  from  the  canals  of  the  utility, 
to  the  consumer.  The  cost  of  changing  the  position  of  a  meter  or 
device,  or  its  removal  must  not  be  charged  to  this  account. 

5-48885 


24  CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS. 

C-23.  MISCELLANEOUS  DISTRIBUTION  EQUIPMENT. 

Charge  to  this  account  the  cost  of  all  miscellaneous  equipment  used 
in  the  distribution  of  water  and  which  is  not  includable  in  the  foregoing 
accounts.  This  includes  tools  and  appliances  (working  stock  only), 
horses,  wagons,  harness,  automobiles,  motorcycles,  bicycles,  furniture 
and  fixtures  (when  not  a  permanent  part  of  buildings,  etc.),  roads, 
trestles  and  bridges,  etc.,  where  a  part  of  the  distribution  system. 

GENERAL    CAPITAL. 

C-24.  GENERAL  EQUIPMENT. 

Charge  to  this  account  the  cost  of  all  equipment  of  general  structures, 
as  provided  under  the  following  heads : 

A.  General  Office  Equipment.     This  includes  the  cost  of  all  equip- 
ment of  general  offices,  such  as  desks,  chairs,  tables,  movable  safes,  filing 
cases,  drafting-room  equipment,  and  other  like  office  appliances  and 
equipment ;  also  engineering  instruments. 

B.  General  Shop  Equipment.     This  includes  the  cost  of  all  equip- 
ment specially  provided  for  general  shops,  such  as  furnaces,  boilers,  gas 
producers,  engines,  electric  generators,  and  other  power  apparatus  used 
in  operating  machinery  in  such  shops;  machine  tools,  cranes,  hoists, 
shafting,  belts  and  the  like  shop  equipment ;  also  such  smithing  equip- 
ment in  general  shops  as  is  used  principally  for  other  general  purposes 
than  shoeing  horses  and  repairing  vehicles. 

NOTE. — Hand  and  other  small  portable  tools  liable  to  be  lost  or  stolen  shall  not  be 
included  herein,  but  portable  tools  and  apparatus  of  special  value  may  be  charged  to 
this  account  and  remain  herein  so  long  as  record  is  kept  of  the  persons  to  whom  such 
tools  and  apparatus  are  issued  and  such  persons  are  made  responsible  therefor. 

C.  General  Store  Equipment.     This  includes  the  cost  of  all  equipment 
of  general  store  structures,  such  as  movable  counters,  movable  shelving, 
and  other  movable  equipment  of  like  nature,  carts,  barrows,  trucks,  etc., 
and  other  apparatus  and  appliances  used  in  handling  materials  and 
supplies. 

NOTE. — Counters,  shelving  and  the  like,  which  are  permanently  attached  to  the 
structure  shall  be  charged  to  Account  No.  C-6,  and  not  to  this  account. 

D.  General  Stable  and  Garage  Equipment.     This  includes  the  cost  of 
all  equipment  of  general  stables  and  garages  including  horses,  harness, 
drays,  wagons,  automobiles  and  other  vehicles,  equipment  of  shoeing 
shops,  harness  repair  shops,  vehicle  repair  shops,  etc. 

C-25.     UNDISTRIBUTED  CONSTRUCTION  EXPENDITURES. 

This  account  includes  the  expenditures  provided  for  in  the  following 
sub-accounts,  when  such  expenditures  can  not  be  satisfactorily  allocated 
to  the  fixed  capital  accounts  to  which  they  relate.  Upon  the  retirement 
or  withdrawal  of  any  property  with  respect  to  which  any  charge  is 


CLASSIFICATION    OF   ACCOUNTS,    WATER    CORPORATIONS.  25 

included  in  this  account  or  any  sub-account  hcreunder,  there  shall  be 
credited  to  this  account  or  the  appropriate  sub-account  such  part  of  the 
undistributed  expenditures  during  construction  (estimated  if  not 
known)  as  may  be  applicable  to  the  property  withdrawn  or  retired. 

A.  Engineering  and  Superintendence.     Charge  to  this  account  all 
expenditures  for  services  of  engineers,  draftsmen  and  superintendents 
employed  on  preliminary  and  construction  work,  and  expenses  incident 
to  the  work  of  such  employees  when  the  expenditures   can  not  be 
assigned  to  specific  construction  accounts. 

B.  Law  Expenditures  During  Construction.     Charge  to  this  account 
general  law  expenditures  incurred  in  the  construction  of  the  water 
plant,  such  as  the  pay  and  expenses  of  counsel,  solicitors  and  attorneys, 
their  clerks  and  attendants,  and  expenses  of  their  offices;  the  cost  of 
printing  briefs,  legal  forms,  testimony,  reports,  etc. ;  payments  to  arbi- 
trators for  the  settlement  of  disputed  questions ;  cost  of  suits  and  pay- 
ments of  special  fees,  notarial  fees  and  witnesses  fees,  and  court  expenses. 
When  any  of  the   expenditures   enumerated  herein   can   be   charged 
directly  to  the  account  for  which  incurred,  they  shall  be  so  charged, 
and  not  to  this  account.     Law  expenditures  in  connection  with  the 
organization  of  the  corporation  shall  be  charged  to  Account  No.   1, 
''Organization." 

C.  Injuries   and   Damages   During    Construction.     Charge    to   this 
account  all  damage  to  or  destruction  of  property  other  than  that  owned 
by  the  corporation,  caused  directly  in  connection  with  the  construction 
of  the  works,  all  expenses  incident  to  injuries  or  death  of  employees  and 
other  persons  for  which  the  corporation  is  held  liable.     This  includes 
such  expenses  as  judgments,  court  costs,  salaries  and  expenses,  or  fees 
of  physicians,  surgeons,  expenses  of  undertakers,  nursas,  and  hospital 
expenses,  medical  and  surgical  supplies,  contribution  to  hospitals  during 
the  period  of  construction  of  the  plant,  transportation  of  injured  per- 
sons, salaries  paid  to  employees  while  disabled,  the  salaries  and  expenses 
of  claim  agents,  adjusters  and  their  assistants.     The  compensation  of 
the  general  solicitors  or  counsel  of  the  corporation  while  engaged  in  the 
defense  and  settlement  of  damage  or  injury  sustained  will  also  be 
charged  to  this  account. 

D.  Taxes  During  Construction.     Charge  to  this  account  all  taxes  and 
assessments  levied  and  paid  on  property  belonging  to  the  corporation 
while  under  construction  and  before  the  plant  is  opened  for  operation, 
except  special  taxes  assessed  for  street  and  other  improvements,  such  as 
grading,  sewering,  curbing,  guttering,  paving,  sidewalks,  etc.,  which  shall 
be  charged  to  the  account  to  which  the  property  benefited  is  charged. 

E.  Miscellaneous  Construction  Expenditures.     Charge  to  this  account 
salaries  and  expenses  of  executive  and  general  officers  of  the  corporation 


26  CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS. 

before  it  is  ready  to  begin  operations ;  clerks  in  general  offices  engaged 
on  construction  accounts  or  work;  rent  and  repair  of  general  offices 
when  rented,  with  the  office  expenses ;  insurance  during  construction ; 
also  construction  and  equipment  items  of  a  special  and  incidental  nature 
which  can  not  properly  be  charged  to  any  other  fixed  capital  account. 

NOTE  A. — This  account  may  include  a  suitable  proportion  of  store  expenses  when 
such  expenses  are  not  assignable  to  specific  materials. 

NOTE  B. — This  account  shall  not  include  any  costs  of  organization,  or  any  costs 
or  discounts  connected  with  the  issue  and  disposal  of  stocks,  bonds,  or  other  securities, 
or  commercial  paper. 

C-26.  INTEREST  DURING  CONSTRUCTION. 

Charge  to  this  account  the  interest  accrued  upon  all  moneys  (and 
credits  available  upon  demand)  expended  in  connection  with  the  con- 
struction and  equipment  of  the  property  from  the  time  of  such  acquisi- 
tion until  the  construction  is  ready  for  use.  Interest  receivable  accrued 
upon  such  moneys  and  credits  shall  be  credited  to  this  account.  Credit 
to  this  account  also  discount  realized  through  prompt  payment  of  bills 
for  materials  and  supplies  used  in  construction,  unless  such  discounts 
are  credited  to  the  bills  ta  which  they  apply. 

If  any  property  with  respect  to  which  an  interest  is  included  in  this 
account  is  withdrawn  or  retired  from  service,  the  amount  of  such 
interest  (estimated  if  not  known)  shall  be  credited  to  this  account  and 
charged  off  as  part  of  the  original  cost  of  the  property  so  retired.  No 
interest  upon  expenditures  for  replacements,  renewals  or  reconstruction 
shall  be  included  in  this  or  any  other  fixed  capital  account  unless  proper 
credits  are  made  to  the  appropriate  fixed  capital  accounts  for  any 
interest  included  in  such  accounts  in  respect  of  property  retired  or 
withdrawn. 

C-27.  COST  OF  PLANT  PURCHASED  IN  LIEU  OF  PLANT  CONSTRUCTED. 

Charge  to  this  account  the  purchase  price  of  a  plant  acquired.  In 
the  entry  reference  shall  be  made  to  decision  number  under  which  the 
Railroad  Commission  authorized  the  purchase. 

This  account  shall  be  used  only  as  a  clearing  account  and  will  be 
closed  by  a  transfer  to  the  appropriate  primary  accounts. 

C-28.  FIXED  CAPITAL  INSTALLED  PRIOR  TO  JANUARY  1,  1913 . 

In  this  account  (on  the  balance  sheet  statement)  shall  be  shown  the 
total  of  the  balances  in  the  ledger  accounts  representing  the  corpora- 
tion's fixed  capital  which  was  installed  prior  to  January  1,  1913,  and 
which  is  still  in  service  at  the  date  of  the  balance  sheet. 

The  accounts  representing  the  fixed  capital  of  the  corporation  as 
carried  on  its  books  at  the  close  of  December  31,  1912,  shall  be  so 
designated  upon  the  books  of  the  corporation  as  to  show  clearly  that 
they  relate  only  to  fixed  capital  installed  prior  to  the  close  of  that 


CLASSIFICATION   OP  ACCOUNTS,  WATER  CORPORATIONS.  27 

date.  No  debits  shall  be  made  to  such  accounts  with  respect  to  any 
property  subsequently  acquired,  but  the  cost  of  such  property  shall  be 
charged  to  the  accounts  hereinbefore  provided.  When  any  property 
acquired  prior  to  January  1,  1913,  is  withdrawn  or  retired  from  service, 
the  amount  at  which  it  stands  charged  shall  be  credited  to  the  account 
in  which  it  is  charged  and  concurrent  debits  shall  be  made  (1)  to 
"Cash,"  "Materials  and  Supplies,"  or  other  account,  as  may  be  appro- 
priate, for  the  value  of  any  salvage;  (2)  to  Account  No.  29,  "Reserve 
for  Accrued  Depreciation,"  or  to  Account  No.  30,  "Reserve  for 
Amortization  of  Intangible  Capital,"  for  the  amount  of  depreciation  or 
other  amortization  applicable  to  the  period  subsequent  to  December  31, 
1912;  and  (3)  to  "Corporate  Surplus  or  Deficit  Account"  for  the' 
remainder  of  the  amount  at  which  the  property  is  carried  in  the 
accounts  for  fixed  capital;  unless  the  corporation  had  on  that  date  a 
reserve  for  retirements,  in  which  case  the  latter  amount,  or  so  much  of 
it  as  may  be  applicable,  shall  be  charged  to  such  reserve  account. 

NOTE. — In  the  reports  to  the  Railroad  Commission,  a  statement  will  be  required 
showing  the  names  of  the  accounts  for  fixed  capital  actually  carried  by  the  corpo- 
ration on  December  31,  1912,  and  the  balances  therein  at  the  date  of  the  report. 

C-29.  FIXED  CAPITAL  INSTALLED  SINCE  DECEMBER  31,  1912. 

This  account  is  a  summary  of  the  accounts  representing  the  corpora- 
tion's fixed  capital  since  December  31,  1912,  and  should  show  the  cost 
of  the  fixed  capital  which  has  been  installed  since  that  date  and  is  still 
in  service  at  the  date  of  the  balance  sheet.  (For  the  primary  Fixed 
Capital  accounts,  see  Account  C-l  to  C-4,  "Intangible  Capital,"  and 
Accounts  C-5  to  C-27,  "Tangible  Capital.") 

INCOME  ACCOUNT. 

INCOME  ACCOUNT  DEFINED  . 

The  income  account  brings  together  those  accounts  that  show  the  total 
amount  of  money  that  the  corporation  has  received  or  becomes  entitled 
to  receive  for  services  rendered  during  a  given  period,  the  return 
accruing  during  the  period  upon  investments,  and  the  disbursements 
and  obligations  incurred  that  affect  the  disposition  of  the  amounts  so 
received  or  accrued.  The  following  accounts  make  up  the  income  account 
.statement  and  should  be  closed  into  the  Income  Account  at  the  close 
of  the  year  or  other  fiscal  period. 

101.  OPERATING  REVENUES. 

Include  in  this  account  the  total  operating  revenues  of  the  corpora- 
tion for  the  period  covered  by  the  income  statement.  See  Accounts 
R-l  to  R-9,  inclusive,  under  "Operating  Revenue." 


28  CLASSIFICATION  OF  ACCOUNTS,  WATER  CORPORATIONS. 

102.  OPERATING  EXPENSES. 

Include  in  this  account  the  total  operating  expenses  of  the  corpora- 
tion for  the  period  covered  by  the  income  statement.  (See  Accounts 
E-l  to  E-51,  inclusive,  under  "Operating  Expenses.") 

103.  UNCOLLECTIBLE  WATER  BILLS. 

Charge  to  this  account  (and  credit  the  account  receivable  in  which 
theretofore  carried)  the  amount  of  any  account  for  water  services 
vhich,  after  a  reasonably  diligent  effort  to  collect,  has  proved  imprac- 
ticable of  collection.  This  account  includes  only  uncollectible  bills  for 
amounts  which  have  been  treated  as  operating  revenues;  other  uncol- 
lectible bills  should  be  charged  to  Account  No.  105-G,  "Uncollectible 
Non-operating  Revenues,"  or  to  Corporate  Surplus  or  Deficit  Account, 
as  may  be  appropriate.  Debts  written  off  as  bad  but  subsequently 
collected,  shall  be  credited  to  this  account. 

104.  NON-OPERATING  REVENUES  . 

A.  Rents   from   Buildings,   Land   and   Apparatus.     Credit   to   this 
account  as  it  accrues  rent  from  the  rental  of  buildings,  land  and  water 
apparatus  and  appliances.     Where  the  contract  of  rental  includes  the 
setting  and  connection  of  such  apparatus  and  also  its  maintenance  by 
the  corporation,  the  total  earnings  from  such  rental  shall  be  credited  to 
thifi  account. 

B.  Interest  and  Dividend  Revenues.     Credit  to  this  account  monthly 
Jill  revenues  accruing  to  the  corporation,  not  retained  in  specific  sinking 
or  other  reserve  funds,  from  interest  upon  all  its  bank  balances,  special 
deposits,  and  other  assets,  when  such  interest  is  a  liability  of  solvent 
concerns  or  individuals,  and  from  dividends  declared  or  guaranteed  by 
solvent  concerns  upon  stocks  held  by  the  corporation.     No  interest  or 
dividends  upon  securities  issued  or  assumed  by  the  accounting  corpora- 
tion shall  be  credited  to  this  account  nor  to  any  other  revenue  account. 

Class  A  corporations  will  subdivide  the  revenue  included  herein  and 
keep  separate  accounts  for — 

a.  Interest  Revenues  on  Funded  Debt  owned. 

b.  Miscellaneous  Interest  Revenues. 

c.  Dividend  Revenues. 

C.  Sinking   and   Other  Reserve  Fund  Accretions.     Credit  to  this 
account  and  charge  the  appropriate  fund  or  its  trustee,  the  revenues 
from  securities  and  other  assets  in  the  hands  of  trustees  or  specifically 
set  aside  for  sinking  and  other  special  funds,  when  the  revenues  are 
retained  as  a  part  of  the  funds. 

NOTE. — Concurrent  entries  should  be  made  charging  Account  No.  113,  "Sinking 
Fund  Appropriations,"  or  Account  No.  114-E,  "Appropriation  to  Reserves,"  crediting 
Account  No.  34,  "Reserves  Invested  in  Sinking  Funds,"  or  No.  35,  "Other  Reserves 
from  Income  or  Surplus,"  as  may  be  appropriate. 


CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS.  29 

D.  Miscellaneous  Non-operating  Revenues.     Credit  to  this  account 
all  non-operating  revenues  not  provided  for  in  the  foregoing  accounts. 

105.  NON-OPERATING  REVENUE  DEDUCTIONS  . 

A.  Kent  Expenses.     Charge  to  this  account  all  expenses  arising  in 
(,'onnection  with  the  procuring  of  revenues  from  rented  property,  such 
as  the  cost  of  negotiating  contracts,  advertising  for  tenants,  fees  paid 
conveyancers,   collector's  commissions,   cost  of  enforcing  payment  of 
rent,  cost  of  ousting  tenants,  etc.     This  includes  the  expenses  accruing 
while  the  property  is  idle  and  awaiting  an  occupant:  also  the  cost  of 
maintenance  of  the  property  when  such  cost  is  borne  by  the  corporation. 
Such  maintenance  includes  depreciation  as  well  as  reparable  wear  and 
tear.     It  doas  not  include  taxes. 

B.  Interest  Expenses.     Charge  to  this  account  all  expense  arising  in 
connection  with  procuring  interest  upon  investments,  such  as  expense 
of  collection,  expense  of  investigating  delay  in  payment,  expense  of 
enforcing  payment,  and  the  like.     It  does  not  include  taxes  on  such 
investments. 

C.  Dividend  Expenses.     Charge  to  this  account  all  expense  arising 
in  connection  with  the  collection  of  dividends  on  stocks  of  other  corpo- 
rations, including  expenses  incurred  in  the  investigation  of  the  affairs 
of  the  corporations  whose  stocks  are  held,  whether  for  the  purpose  of 
detecting  mismanagement  or  for  the  purpose  of  inducing  the  declara- 
tion of  dividends,  and  all  expense  connected  with  enforcing  payment 
of  dividends  when  declared.     It  does  not  include  taxes  on  such  in  vest- 
ments. 

D.  Others'  Operations  Expenses.     Charge  to  this  account  the  cost  of 
negotiating  contracts  whereunder  the  corporation  is  to  participate  in 
the  profits  resulting  from  the  operations  of  others ;  also  all  expense  of 
collecting  the  corporation's  proportion  of  such  profits,  and  all  expense 
connected  with  procuring  the  modification  or  the  dissolution  of  any 
such  contract. 

E.  Miscellaneous  Non-operating  Expenses.     Charge  to  this  account  all 
non-operating  expense  not  provided  for  in  the  foregoing  sub-accounts. 

F.  Non-operating  Taxes.     Charge  to  this  account  all  taxes  payable 
by  the  corporation  accrued  upon  non-operating  property,  and  all  taxes 
assignable  to  non-operating  revenues. 

G.  Uncollectible  Non-operating  Revenues.     When  any  non-operating 
revenues  are  judged  by  the  corporation  to  be  uncollectible,  the  amount 
thereof  shall  be  credited  to  the  account  in  which  theretofore  charged 
nnd  charged  to  this  account. 


30  CLASSIFICATION  OF  ACCOUNTS,  WATER  CORPORATIONS. 

106.  INTEREST  ACCRUED  ON  FUNDED  DEBT  . 

Charge  to  this  account  monthly  all  interest  accrued  on  outstanding 
funded  debt  issued  or  assumed  by  the  corporation.  This  account  does 
not  include  interest  on  securities  held  by  the  corporation  in  its  treasury, 
or  pledged  as  collateral. 

NOTE  A. — The  amount  charged  to  this  account  shall  be  concurrently  credited  to 
Account  No.  25,  "Interest  Accrued,"  to  which  account  shall  be  debited  payments  made 
on  account  of  interest, 

107.  OTHER  INTEREST  DEDUCTIONS. 

Charge  to  this  account  monthly  all  interest  accrued  on  receivers' 
certificates  and  on  interest  bearing  unfunded  obligations  of  the  corpo- 
ration. 

NOTH  A. — The  amount  charged  to  this  account  shall  be  concurrently  credited  to 
Account  No.  25,  "Interest  Accrued,"  or  to  No.  21,  "Receivers'  Certificates,"  to  which 
accounts  shall  be  debited  payments  made  on  account  of  such  interest. 

108.  RENT  DEDUCTIONS. 

Charge  to  the  appropriate  account  as  under,  rents  paid  or  accrued 
on  property  of  all  kinds  used  in  the  operation  of  the  water  system. 

A.  Rent  for  Lease  of  Other  Water  Plant.     Charge  to  this  account 
monthly  all  amounts  accrued  against  the  corporation  for  rent  of  water 
plant  and  equipment  which  it  holds  under  some  form  of  lease  from 
another,  and  of  which  it  has  the  exclusive  possession. 

This  account  is  intended  to  cover  only  rents  payable  for  the  use  of 
water  plant  or  operating  units  held  as  a  whole  under  some  form  of 
lease. 

B.  Miscellaneous  Rent  Deductions.     Charge  to  this  account  all  other 
rents  paid  or  accrued  on  property  used  in  the  operation  of  the  water 
system. 

109.  AMORTIZATION  OF  DEBT  DISCOUNT  AND  EXPENSE  . 

Charge  to  this  account  at  or  before  the  close  of  any  fiscal  period  that 
proportion  of  the  unamortized  discount  and  expense  on  outstanding 
debt  which  is  applicable  to  the  period.  This  proportion  shall  be  deter- 
mined according  to  a  rule,  the  uniform  application  of  which  during  the 
interval  between  the  issue  and  the  maturity  of  any  debt  will  completely 
amortize  or  wipe  out  the  discount  at  which  such  debt  was  issued  and 
the  debt  expense  connected  therewith.  Such  amortization  may  at  the 
option  of  the  corporation  be  earlier  affected  by  charging  all  or  any 
portion  of  such  discount  and  debt  expense  to  Account  No.  114^G, 
"Other  Deductions  from  Surplus,"  immediately  upon  issue  of  the  debt 
or  thereafter. 


CLASSIFICATION    OF   ACCOUNTS,   WATER    CORPORATIONS.  31 

UO.  AMORTIZATION  OF  PREMIUM  ON  DEBT — CR. 

Credit  this  account  at  or  after  the  close  of  any  fiscal  period  the 
proportion  of  the  premium  at  which  outstanding  debt  was  issued  which 
is  applicable  to  the  period.  This  proportion  shall  be  determined 
according  to  a  rule,  the  uniform  application  of  which  during  the 
interval  between  the  issue  and  the  maturity  of  any  debt  will  completely 
amortize  or  wipe  out  the  premium  at  which  such  debt  was  issued. 

111.  MISCELLANEOUS  DEDUCTIONS  FROM  INCOME  . 

Charge  to  this  account  the  matters  provided  for  in  the  following 
sub-accounts : 

A.  Loss  on  Operations  of  Others.    Whenever,  in  accordance  with  the 
terms  of  any  contract,  the  corporation  is  bound  to  contribute  toward 
reimbursement  of  the  losses  resulting  from  the  operations  of  others,  all 
liabilities  accruing  to  the  corporation  from  such  source  shall  be  charged 
to  this  account. 

B.  Amortization  of  Landed  Capital.     Charge  to  this  account  at  the 
close  of  any  fiscal  period  such  portion  of  the  original  money  cost 
(estimated  if  not  known)  of  landed  capital  as  is  necessary  to  cover  the 
proportion  of  the  life  thereof  expired  during  such  period. 

NOTH  A. — The  amounts  charged  to  this  account  shall  be  concurrently  credited  to 
Account  No.  30,  "Reserve  for  Amortization  of  Intangible  Capital." 

NOTII  B. — When  any  landed  capital  expires  or  is  otherwise  retired  from  service 
(as,  e.  ff.,  through  sale)  the  capital  account  or  investment  account  (if  any)  originally 
charged  therewith  shall  be  credited  with  the  amount  originally  charged ;  Account 
No.  30,  "Reserve  for  Amortization  of  Intangible  Capital,"  shall  be  debited  with  all 
amounts  theretofore  credited  to  such  account  in  respect  of  such  landed  capital  so 
going  out  of  service,  the  appropriate  account  shall  be  debited  with  the  proceeds  of 
sale  (if  any),  and  any  necessary  adjustment  shall  be  made  through  the  "Corporate 
Surplus  or  Deficit"  account. 

C.  Other    Contractual   Deductions    from    Income.     Charge    to   this 
account  all  deductions  from  gross  income  which  are  in  the  nature  of 
fixed  charges  and  not  provided  for  otherwise,  such  as  those  required  by 
the  terms  of  some  contract,  agreement,  charter  provision,  law,  or  ordi- 
nance.    Such  deductions  should  not  include  any  appropriations  or  dis- 
positions of  income  that  rest  solely  in  the  discretion  of  the  accounting 
corporation. 

NOTE. — Payments  to  sinking  funds  shall  not  be  charged  to  this  account  but  shall 
bo  included  In  Account  No.  113,  "Sinking  Fund  Appropriations." 

CORPORATE   SURPLUS   OR    DEFICIT   ACCOUNT. 

CORPORATE  SURPLUS  OR  DEFICIT  ACCOUNT  DEFINED. 

This  account  or  summary  is  the  connecting  link  between  the  income 
account  and  the  balance  sheet.  It  summarizes  the  changes  in  the  corpo- 
rate surplus  or  deficit  during  a  given  fiscal  period  resulting  from  the 
business  transactions  during  that  period  as  well  as  those  affected  by 


32  CLASSIFICATION   OF   ACCOUNTS,   WATER   CORPORATIONS. 

any  disposition  of  net  profits  made  solely  at  the  option  of  the  corpora- 
tion, by  accounting  adjustments  not  properly  attributable  to  the  period, 
or  by  miscellaneous  losses  or  gains  not  provided  for  elsewhere. 

To  this  account  should  be  carried  the  net  balance  of  the  accounts 
forming  the  Income  account,  and  in  it  should  be  summarized  all 
optional  appropriations  (including  dividends)  ;  miscellaneous  adjust- 
ments due  to  errors  in  accounting  in  prior  fiscal  periods;  profits  from 
the  sale  of  securities  or  other  property;  losses  upon  property  sold  or 
otherwise  retired  and  not  covered  by  reserves,  and  unusual  losses  and 
gains  of  like  nature.  For  these  matters  the  following  accounts  are 
provided ;  their  net  balance  added  to  the  net  balance  from  the  Income 
account  should  show  the  net  surplus  or  deficit  on  the  date  of  the  balance 
sheet. 

112.  DIVIDENDS  ON  OUTSTANDING  STOCK. 

When  any  dividend  is  declared  upon  any  outstanding  stocks  of  the 
corporation,  the  amount  of  such  dividend  shall  thereupon  be  charged 
to  this  account.  All  entries  to  this  account  shall  show  the  amount  of 
stock  upon  wyhich  the  dividend  is  declared  as  well  as  the  amount  thereof. 
If  the  dividend  is  payable  in  anything  other  than  money,  such  thing 
shall  be  described  in  the  entry  with  sufficient  particularity  to  identify 
it,  and  the  actual  money  value  thereof  shall  be  stated  as  the  amount  of 
the  dividend. 

When  any  dividend  is  declared  upon  the  stocks  of  the  corporation 
owned  by  or  held  in  behalf  of  the  corporation,  the  amount  of  such 
dividend  thereon  shall  be  credited  to  this  account.  Entries  of  credits 
to  this  account  shall  be  made  with  the  same  degree  of  particularity  as 
is  prescribed  in  the  preceding  paragraph. 

113.  SINKING  FUND  APPROPRIATIONS. 

Charge  to  this  account  all  appropriations  to  sinking  funds  and  accre- 
tions to  such  funds  on  account  of  income  from  previous  investments. 
Such  appropriations  should  include:  (1)  direct  payments;  (2)  income 
from  investments  of  sinking  funds;  (3)  income  from  cash  or  special 
deposits  held  by  trustees  of  sinking  funds.  All  earnings  of  sinking 
funds  and  contributions  to  such  funds  shall  be  included  in  this  account 
whether  such  contributions  are  made  at  the  option  of  the  corporation 
or  are  required  by  the  provisions  of  mortgages,  deeds  of  trust,  or  other 
contracts. 

114.  MISCELLANEOUS  DEDUCTIONS  FROM  SURPLUS. 

A.  Expenses  Unprovided  for  Elsewhere.  Charge  to  this  account  all 
expenses  not  chargeable  as  a  part  of  operating  expenses  or  of  non- 
operating  expenses,  such  as  fines  levied  on  the  corporation  for  violation 


CLASSIFICATION   OF   ACCOUNTS,   WATER    CORPORATIONS.  33 

of  law,  for  misfeasance,  etc.,  fines  levied  on  directors,  officers,  and  other 
employees  of  the  corporation  and  assumed  by  it,  donations  to  funds,  to 
churches  and  other  associations,  and  other  like  expenses  and  outgoes. 

B.  Realized  Depreciation  Not  Covered  by  Reserves.     Charge  to  this 
account  the  realized  depreciation   (that  is,  the  difference  between  the 
original  cost  and  the  salvage,  if  any)  on  tangible  capital  retired,  when 
such  depreciation  has  not  been  provided  for  through  a  depreciation 
reserve.     This  includes  such  portion  of  the  realized  depreciation  on 
any  physical  property  which  was  installed  prior  to  the  creation  of  the 
reserve  for  accrued  depreciation  as  is  due  to  life  in  service  before  that 
date;  this  portion  may  be  estimated  on  the  basis  of  the  proportion 
which  the  life  in  service  of  the  property  in  question   prior  to  the 
establishment  of  the  reserve  bears  to  its  entire  life  in  service. 

C.  Amortization  Unprovided  for  Elsewhere.     Charge  to  this  account 
when  any  intangible  property  expires  or  is  relinquished,  such  portion 
of  its  cost  as  has  not  been  previously  written  off  or  is  not  covered  by 
Account  No.  30,  "Reserve  for  Amortization  of  Intangible  Capital." 
Charge  also  to  this  account  all  optional  amortization,  such  as  that  of 
'organization  expenses,  and  assets,  carried  in  Account  No.  C— 4,  "Other 
Intangible  Capital." 

D.  Gifts  to  Controlled  Corporations.     Charge  to  this  account  all  gifts 
made   by   the    corporation   to    its   controlled    corporations,    also   such 
portions  of  all  advances  thereto  as  are  not  carried  as  assets. 

E.  Appropriations  to  Reserves.     Charge  to  this  account  all  optional 
appropriations  to  reserves. 

F.  Other  Appropriations  from  Surplus.     Charge  to  this  account  all 
optional  appropriations  made  by  the  corporation  and  not  provided  for 
elsewhere. 

NOTE. — A  complete  analysis  of  this  account  will  be  required  in  annual  reports  of 
corporations  to  the  Railroad  Commission. 

G.  Otlicr   Deductions   from    Surplus.     Charge   to   this    account   all 
deductions  from  surplus  made  to  extinguish  discount  on  stocks  out- 
standing, optional  amortization  of  debt  discount  and  expense,  deduc- 
tions because  of  erroneous  accounting  in  prior  fiscal  periods,  and  all 
other  deductions  from  surplus  not  provided  for  elsewhere. 

NOTE. — A  complete  analysis  of  this  account  will  he  required  in  annual  reports  of 
corporations  to  tho  Railroad  Commission. 

115.  MISCELLANEOUS  ADDITIONS  TO  SURPLUS. 

Credit  to  this  account  all  additions  to  surplus  due  to  erroneous 
accounting  in  previous  fiscal  periods,  profits  arising  from  the  sale  of 
securities  or  other  property,  etc. 


34  CLASSIFICATION  OP  ACCOUNTS,  WATER  CORPORATIONS. 

OPERATING  REVENUES— WATER. 

EXPLANATION. 

Revenues  Defined.  By  revenues,  as  the  word  is  used  herein,  are  meant 
all  amounts  of  money  which  the  corporation  receives  or  becomes  law- 
fully entitled  to  recover  for  services  rendered,  for  products  sold,  as 
gro-:s  profits  on  merchandise  sold,  or  as  a  return  upon  its  property  (or 
interest  in  property).  Revenues  are  classified  as  OPERATING  REVENUES 

and  NON-OPERATING  REVENUES. 

Operating  Revenues  Defined.  Operating  revenues  are  those  derived 
from  the  sale  of  products  and  merchandise,  from  services  rendered, 
and  from  return  on  property  used  by  the  person  or  corporation  in  its 
own  operations. 

Non-operating  Revenues  Defined.  Non-operating  revenues  are  those 
derived  as  a  return  upon  the  property  of  the  corporation  not  used  in 
the  operation  of  its  water  system,  or  in  the'hands  of  others  or  from 
its  interests  in  property  in  the  hands  of  others.  They  may  be  sub- 
classified  as  RENTS,  INTEREST,  DIVIDENDS,  and  MISCELLANEOUS. 

R-l.  EARNINGS  FROM  COMMERCIAL  SALES.  • 

Credit  this  account  with  all  revenue  from  water  sales  to  commercial 
consumers,  both  where  the  revenue  is  dependent  upon  the  quantity  of 
water  taken  as  received  by  meter  or  at  a  flat  rate.  Commercial  con- 
sumers embrace  residences,  offices,  apartment  houses,  retail  commercial 
establishments,  etc.,  where  water  is  not  used  primarily  for  power  or 
industrial  purposes.  Water  sold  to  the  municipality  for  use  in  public 
buildings  and  not  included  in  the  contract  for  hydrant  rentals,  and 
other  municipal  uses,  will  be  credited  to  this  account.  Where  a  dis- 
count is  allowed  for  prompt  payment  of  bills,  or  penalty  is  added  for 
non-payment  on  a  fixed  date,  such  discount  or  penalty  shall  be  charged 
or  credited  to  this  account.  The  earnings  shall  be  subdivided  and 
reported  separately  to  the  Railroad  Commission  as  follows: 

A.  Commercial  earnings — flat  rate. 

B.  Commercial  earnings — metered. 

R-2.  EARNINGS  FROM  INDUSTRIAL  SALES. 

Credit  this  account  with  all  earnings  from  the  sale  of  water  for 
power  and  industrial  purposes  to  manufacturers  and  industrial  estab- 
lishments. 

Discounts  allowed  for  prompt  payment  of  bills  or  penalties  added  for 
non-payment  on  a  fixed  date  (such  as  discounts  or  penalties)  shall  be 


CLASSIFICATION   OP   ACCOUNTS,   WATER    CORPORATIONS.  35 

charged  or  credited  to  this  account.     The  earnings  shall  be  subdivided 
and  reported  separately  to  the  Railroad  Commission  as  follows: 

A.  Earnings  from  Industrial  Sales — flat  rate. 

B.  Earnings  from  Industrial  Sales — metered. 

R-3.  EARNINGS  FROM  MUNICIPAL  HYDRANT  RENTALS  : 

Credit  to  this  account  all  revenue  from  the  municipality  for  hydrant 
rental.  Where  the  hydrant  rental  paid  by  the  municipality  includes 
the  use  of  water  for  street  sprinkling  and  flushing  purposes,  and  such 
water  is  not  being  separately  metered,  the  total  revenue  collected  under 
the  contract  for  hydrant  rental  will  be  credited  to  this  account. 

R-4.  EARNINGS  FROM  SALE  FOR  STREET  SPRINKLING  . 

Credit  to  this  account  all  earnings  from  sale  of  water  for  street 
sprinkling,  both  to  individuals  and  contractors  engaged  in  sprinkling 
streets,  parks,  and  thoroughfares,  and  also  with  sales  to  the  municipality 
where  such  sprinkling  is  performed  by  the  city. 

R-5.  EARNINGS  FROM  SALES  TO  MUNICIPAL  DEPARTMENTS  . 

Credit  to  this  account  all  earnings  from  the  sale  of  water  to  municipal 
departments  other  than  for  street  sprinkling  if  such  is  performed  by 
the  municipality.  This  includes  earnings  from  the  sale  of  water  for 
sewer  and  street  flushing,  street  constructions,  filling  fire  cisterns  and 
basins,  etc.  Where  a  separate  contract  is  entered  into  for  water  services 
at  public  buildings,  as  schools,  police  and  fire  stations,  city  hall,  etc., 
revenue  collected  under  such  contracts  will  be  credited  to  this  account, 
and  a  record  kept  of  revenue  received  under  each  separate  contract. 

R-6.  EARNINGS  FROM  SALES  FOR  IRRIGATION  . 

Credit  to  this  account  all  earnings  from  the  sale  of  water  for  irriga- 
tion purposes  at  rates  specially  made,  in  any  manner  applied  to  units 
of  consumption. 

R-7.  MISCELLANEOUS  EARNINGS  FROM  OPERATIONS. 

Credit  to  this  account  all  earnings  from  operating  transactions  not 
properly  included  in  the  preceding  accounts. 

OTHER  OPERATING  REVENUES. 

R-8.  PROFIT  ON  MERCHANDISE  SALES  . 

Credit  to  this  account  the  receipts  derived  from  the  sale  of  water 
appliances  and  plumbing  fixtures  used  in  the  consumption  and  utiliza- 
tion of  water.  Profit  as  used  in  the  account,  is  defined  as  being  the 
excess  of  the  sales  price  over  the  casli  cost ;  including  the  invoice  cost, 
cost  of  handling,  storage,  etc.;  charge  this  account  with  all  expense  for 


36  CLASSIFICATION   OF  ACCOUNTS,   WATER   CORPORATIONS. 

labor  and  material  in  connection  with  the  sale  of  such  appliance  or 
merchandise.  The  net  amount  only,  or  the  profit  on  sales,  is  to  be 
carried  to  "Income  Account."  The  credit  and  charges  to  this  account 
shall  be  made  in  such  a  manner  as  to  admit  of  a  detailed  analysis  when 
called  for  by  the  Railroad  Commission. 

R-9.  PROFIT  ON  PIPING  AND  CONNECTIONS. 

Credit  this  account  with  all  earnings  derived  from  piping  and  connec- 
tion work  performed  by  the  corporation.  This  includes  earnings  from 
services  performed  on  the  consumer's  premises,  such  as  piping,  con- 
necting and  disconnecting  house  piping  and  water  fixtures,  the  relocat- 
ing of  piping  or  apparatus,  and  other  plumbing  and  fixture  work. 

If  prospective  consumers  are  charged  for  services  performed  by  the 
corporation  in  connecting  the  house  piping  and  plumbing  with  the 
service  connection,  or  for  laying  such  service  piping,  such  earnings 
shall  be  credited  to  this  account.  Charge  to  this  account  all  expenses 
for  labor  and  material  in  connection  with  such  operations.  The  net 
amount  only,  or  the  profit  from  piping  and  connection  work  being 
carried  to  the  "Income  Account."  The  credits  and  charges  will  be 
made  in  such  manner  as  to  admit  of  a  detailed  analysis  when  called  for 
hv  the  Railroad  Commission. 


Operating1  Expenses. 

INSTRUCTIONS    PERTAINING   TO   OPERATING    EXPENSE   ACCOUNTS. 

OPERATING  EXPENSES  DEFINED. 

By  operating  expenses  is  meant  the  expenses  of  conducting  water 
utility  operations  and  services  incident  thereto,  including  the  expense 
of  maintaining  the  property  devoted  to  the  water  operations,  the 
expense  of  collecting  revenues,  accounting  and  the  general  and  super- 
vision expenses  in  connection  with  such  operations.  In  order  that  the 
operating  expenses  shall  clearly  reflect  only  the  cost  of  rendering  such 
utility  service,  all  expenses  incident  to  any  other  than  water  utility 
service,  shall  be  excluded  from  accounts  thereunder  and  charged  to 
accounts  otherwise  provided  under  non-operating  expenses. 

DEFINITIONS  OF  CERTAIN  TERMS  USED  IN  CONNECTION  WITH 
EXPENSE  ACCOUNTS. 

Except  where  some  other  meaning  is  clearly  specified  in  the  definitions 
of  the  accounts,  the  following  words,  wherever  used  hereunder,  have 
the  meanings  below  stated : 

Cost  means  cash  or  money  cost,  and  not  price  based  on  a  term  of 
credit. 


CLASSIFICATION    OF   ACCOUNTS,    WATER  CORPORATIONS.  37 

Labor  means  human  services  of  whatever  character. 

Cost  of  Labor  includes  wages,  salaries  and  fees  paid  to  persons  for 
their  services. 

Cost  of  materials  and  supplies  includes  all  specifically  assignable 
transportation  charges  incurred  in  obtaining  the  delivery  of  such 
materials  and  supplies  upon  the  premises  of  the  purchaser,  and  cost  of 
any  special  tests  made  thereon  prior  to  their  acceptance;  and  in  case 
the  accounting  person  or  corporation  desires,  it  may  include  a  suitable 
proportion  of  store  expense  (when  the  materials  and  supplies  are  passed 
through  stores)  and  the  cost  of  further  transportation  to  the  place  of 
consumption,  and  a  suitable  proportion  of  the  expense  of  the  purchasing 
department,  in  which  case  a  corresponding  credit  shall  be  made  to  the 
suitable  expense  account  as  hereinafter  provided. 

Cost  of  repairs,  when  made  by  the  accounting  person  or  corporation, 
includes  cost  of  labor  expended  and  material  consumed,  less  salvage, 
if  any. 

NOTE. — It  is  not  required  that  the  transportation  element  of  cost  shall  be  assigned 
with  a  greater  degree  of  accuracy  than  to  the  nearest  cent  per  unit  of  material  or 
supply.  Where  a  single  transportation  item  covers  a  multitude  of  things  the  portion 
of  the  expense  not  assigned  to  specific  things  should  be  charged  to  the  same  account 
that  store  expenses  are  charged  to. 

GENERAL  ACCOUNTS. 

1.  SOURCE  OF  WATEB  SUPPLY  EXPENSES. 

2.  PUMPING  EXPENSES. 

3.  PURIFICATION  EXPENSES. 

4.  TRANSMISSION  AND  DISTRIBUTION  EXPENSES. 

5.  COMMERCIAL  EXPENSES. 

6.  GENERAL  AND  MISCELLANEOUS  EXPENSES. 

7.  TAXES. 

8.  DEPRECIATION,  ETC. 

Classification  for  Water  Utilities. 

1.  SOURCE  OF  WATER  SUPPLY. 
E-l.  SUPERINTENDENCE. 

Charge  to  this  account  the  salaries  and  expenses  of  the  superintend- 
ent and  assistants,  chemists,  draftsmen,  foremen  and  all  clerical  help 
upon  records  and  accounts  pertaining  to  the  source  of  water  supply, 
whether  such  service  is  performed  at  the  general  office,  or  at  the  plants. 

E-2.  OPERATING  LABOR. 

Charge  to  this  account  the  salary  and  wages  of  patrolmen,  inspectors, 
caretakers  and  other  employees  engaged  in  operating  equipment  appur- 
tenant to  such  facilities.  Do  not  include  maintenance,  labor  or  labor 
pumping  water. 


74021 


9 

CLASSIFICATION  l5P   . 


38  CLASSIFICATION  DP  ACCOUNTS,   WATER   CORPORATIONS. 

E-3.  OPERATING  SUPPLIES  AND  EXPENSES. 

Charge  to  this  account  the  cost  of  supplies  consumed,  and  expenses 
incurred  in  the  operation  of  the  source  of  water  supply.  Do  not 
include  maintenance  supplies  or  expenses. 

E-4.  WATER  PURCHASED  FOR  RESALE. 

Charge  to  this  account  the  cost  at  the  point  of  delivery  to  the  utility 
of  all  water  purchased  for  resale. 

NOTE. — Details  of  this  account  shall  be  kept  so  as  to  show  from  whom  purchased, 
quantity  purchased,  and  the  rate  and  amount  paid  therefor. 

E-5.  REPAIRS  TO  WATER  SUPPLY  BUILDINGS  AND  FIXTURES. 

Charge  to  this  account  the  cost  of  labor  and  material  used  in  repairs 
to  buildings,  fixtures  and  grounds  used  in  connection  with  the  source  of 
water  supply,  such  as  dwellings  occupied  by  patrolmen,  inspectors,  care- 
takers, and  other  employees  engaged  in  the  operation  of  the  source  of 
water  supply,  pump  houses,  well  houses,  and  other  buildings. 

NOTE. — If  source  of  water  supply  pumping  is  done  in  the  pumping  station  where 
water  is  pumped  into  the  distribution  system,  this  account  may  be  charged  with  an 
equitable  portion  of  the  cost  of  maintaining  such  station  buildings,  fixtures  and 
grounds. 

E-6.  REPAIRS  TO  SURFACE  SOURCE  OF  SUPPLY  FACILITIES. 

Charge  to  this  account  the  cost  of  labor  and  material  used  in  repairs 
to  impounding  reservoirs,  dams,  artificial  lakes  and  ponds,  canals,  con- 
duits, embankments,  channels,  waste  weirs,  gates,  valves,  gate  struc- 
tures, pipe  lines,  flumes,  acqueducts,  supporting  trestles,  viaducts,  anil 
appurtenant  equipment  when  used  for  collection  or  diversion  of  water 
from  a  surface  source  of  supply. 

E-7.  REPAIRS  TO  GROUND  SOURCE  OF  WATER  SUPPLY. 

Charge  to  this  account  the  cost  of  labor  and  material  used  in  repairs 
to  large  open  wells,  shallow  tubular  wells,  deep  wells,  artesian  wells, 
springs,  and  repairs  to  infiltration  galleries.  Include  also  repairs  to 
collecting  reservoirs,  intake  wells,  and  conduits  and  appurtenant  equip- 
ment when  used  for  the  collection  of  water  from  a  ground  source  of 
water  supply. 

2.  PUMPING. 

E-8.  SUPERINTENDENCE. 

Charge  to  this  account  the  salary  and  wages  of  superintendent  of  the 
pumping  plant,  the  assistant  superintendent,  foremen,  chemists,  engi- 
neers, draftsmen,  and  all  clerical  help  upon  records  and  accounts  per- 
taining to  pumping  (see  capital  accounts  Nos.  C-14  and  15),  whether 
such  services  are  performed  at  the  general  office  or  at  the  plant. 


CLASSIFICATION   OF   ACCOUNTS,   WATER    CORPORATIONS.  39 

E-9.  PUMPING  LABOR. 

Charge  to  this  account  the  salary  and  wages  of  all  employees  engaged 
in  operating  equipment.  This  includes  such  labor  as  that  of  chief 
engineer,  assistant  engineers,  firemen,  helpers,  oilers,  wipers,  motor 
attendants,  shovelers,  weighers,  feed  pump  men,  blowing  flues,  cleaning 
boilers,  and  other  labor  in  engine  and  boiler  and  pump  room  directly  in 
connection  with  power  pumps. 

E-10.  MISCELLANEOUS  LABOR. 

Charge  to  this  account  the  salary  and  wages  of  all  employees  in  and 
about  the  pumping  plant  such  as  watchmen,  janitors,  messengers,  labor 
cleaning  buildings  and  yards,  and  other  labor  chargeable  to  pumping 
plant  not  included  in  the  foregoing  accounts. 

E-ll.  FUEL  FOR  STEAM. 

Charge  to  this  account  all  fuel  used  under  boilers  at  the  pumping 
plant,  whether  coal,  oil,  gas,  or  other  fuel  at  cost  plus  freight  and 
switching  charges,  demurrage  and  labor  discharging  or  transferring 
fuel  from  point  of  delivery  to  place  of  storage. 

E-12.     POWER  PURCHASED. 

Charge  to  this  account  the  cost  of  all  steam,  electricity,  or  gas  pur- 
chased for  the  operation  of  prime  movers  at  pumping  plant. 

E-13.  LUBRICANTS,  ETC. 

Charge  to  this  account  the  cost  of  all  lubricants  for  power  pumping 
equipment,  such  as  cylinder  oil,  machine  oil,  graphite  and  other  lubri- 
cants; also  boiler  compounds. 

E-14.  MISCELLANEOUS  PUMPING  STATION  SUPPLIES  AND  EXPENSES. 

Charge  to  this  account  all  operating  supplies  and  expenses  of  pump- 
ing plant,  such  as  waste,  packing,  wipers,  hose,  gaskets,  gauge  glasses, 
hand  tools,  gas  and  electricity  for  lighting,  laboratory  apparatus  and 
supplies,  power  plant  records,  boiler  inspection,  telephone  service,  sta- 
tionery, water  for  fire  protection  and  general  use,  janitor's  supplies, 
and  items  of  similar  nature. 

E-15.  REPAIRS  TO  PRIMARY  PUMPING  EQUIPMENT. 

Charge  to  this  account  all  labor  and  material  used  in  repairs  to  all 
pumping  equipment  driven  by  steam,  electricity,  gas  or  oil.  This 
includes  prime  movers,  whether  they  are  combined  into  one  machine  or 
are  separate  units  of  equipment.  Include  also  repairs  to  appurtenant 
equipment,  such  as  condensers,  lubricating  systems,  belting,  etc. 


40  CLASSIFICATION   OF  ACCOUNTS,   WATER   CORPORATIONS. 

E-16.    REPAIRS  TO  BOILERS  AND  BOILER  PLANT  EQUIPMENT. 

Charge  to  this  account  all  labor  and  material  used  in  repairs  to  fur- 
naces, boilers,  feed  pumps,  economizers,  feed  water  heaters,  super- 
heaters, flues  to  smoke-stack  entrance,  boiler  water  purification  equip- 
ment, stokers,  boiler  room  cranes,  oil  tank  equipment,  including  feed 
piping  and  auxiliary  equipment.  Also  the  specially  provided  founda- 
tion and  settings  for  such  equipment. 

NOTE. — The  cost  of  repairing  smoke  stacks,  either  iron,  steel,  or  brick  should  be 
charged  to  Account  No.  E-18,  "Repairs  to  Pumping  Station  Buildings,  Fixtures  and 
Grounds." 

E-17.  REPAIRS  OF  MISCELLANEOUS  PUMPING  STATION  EQUIPMENT. 

Charge  to  this  account  all  labor  and  material  used  in  repairs  to  pump- 
ing station  equipment,  such  as  cranes,  hoists,  machine  tools,  safety 
appliances,  also  the  piping  system  in  connection  with  making  of  steam 
and  the  delivery  thereof  to  the  prime  movers  such  as  valves,  traps, 
injectors,  expansion  joints,  pipe  supports,  gauges,  gauge  boards,  and 
similar  equipment.  Also  includes  repairs  to  wagons,  harness,  auto- 
mobiles, motorcycles,  bicycles,  shoeing  horses,  furniture,  etc. 

NOTE. — Repairs  to  conduits  for  station  wiring,  pipes  for  heating  buildings,  and 
pipes  supplying  water  for  general  station  purposes  should  be  charged  to  Account 
No.  E-18,  "Repairs  to  Power  Pumping  Buildings  and  Fixtures." 

E-18.  REPAIRS  TO  PUMPING  STATION  BUILDINGS,  FIXTURES  AND 

GROUNDS. 

Charge  to  this  account  the  cost  of  labor  and  material  used  in  repairs 
to  buildings,  fixtures  and  grounds.  This  will  include  repairs  to  struc- 
tures and  all  fixtures  permanently  attached  thereto,  such  as  water  pipes 
and  fixtures,  pipes  and  fixtures  for  heating  and  ventilating,  gas  pipes 
and  fixtures,  electric  wiring  and  fixtures  for  lighting,  signalling,  and 
elevator  purposes,  motors,  generators,  all  iron,  steel,  concrete,  or  brick 
smoke  stacks,  used  for  heating  or  power  plant  purposes,  also  fences, 
walls,  sidewalks,  and  pavements  adjacent  to  such  buildings. 

3.  PURIFICATION. 
E-19.  PURIFICATION  LABOR, 

Charge  to  this  account  the  salary  and  wages  of  employees  engaged 
in  the  different  processes  of  purification  of  water.  This  includes  such 
labor  as  cleaning  basins,  removing  ice  and  sediment,  etc.,  operating 
filters,  and  water  treatment  equipment,  purification  by  slow  and  rapid 
sand  filtration  and  other  means.  Do  not  include  labor  on  repairs. 

E-20.  PURIFICATION  SUPPLIES  AND  EXPENSES. 

Charge  to  this  account  the  cost  of  all  supplies  consumed  and  expenses 
incurred  in  the  purification  of  water,  such  as  chemicals,  coagulants,  and 


CLASSIFICATION    OF   ACCOUNTS,   WATER    CORPORATIONS.  41 

other  supplies,  such  as  soap,  brooms,  towels  and  similar  items  used  in 
the  process  of  water  purification,  softening,  removal  of  iron,  alg«e,  etc. 

E-21.  REPAIRS  TO  PURIFICATION  PLANT  AND  STRUCTURES. 

Charge  to  this  account  the  cost  of  all  labor  and  material  in  making 
repairs  to  the  purification  plant.  This  includes  repairs  to  chlorine 
apparatus,  settling  basins,  renewing  and  washing  sand  and  repairs  to 
all  other  equipment  used  in  the  purification  of  water  by  plain  sedimen- 
tation, sedimentation  with  coagulation,  treatment  for  softening  and 
removal  of  iron,  alga?,  etc.,  purification  by  slow  and  rapid  sand  filtra- 
tion, mechanical  filters,  also  repairs  of  buildings,  fixtures  and  grounds 
devoted  to  the  purification  of  water. 

4.  TRANSMISSION  AND  DISTRIBUTION. 
E-22.  SUPERINTENDENCE. 

Charge  to  this  account  salary  an,d  expenses  of  superintendents, 
assistants,  general  foremen,  clerical  help  on  records  and  accounts,  and 
such  portion  of  the  engineering  staff  as  is  directly  assignable  to 
transmission  and  distribution,  also  salaries  and  expenses  of  engineers, 
draftsmen,  cost  of  drawing  material,  stationery  and  other  miscellaneous 
items. 

E-23.  PATROLLING  STORAGE  FACILITIES. 

Charge  to  this  account  salary  and  wages  of  all  employees  engaged 
in  patrolling,  inspecting  and  operating  the  distribution  storage  facil- 
ities, also  includes  the  wages  of  employees  stationed  at  the  distribution 
storage  reservoirs,  inspection  of  tanks  and  standpipes,  etc.,  including 
minor  repairs  made  by  patrolmen. 

E-24.  METER  AND  FITTINGS,  DEPARTMENT  EXPENSES  AND  SUPPLIES. 

Charge  to  this  account  all  labor  and  material,  removing  and 
re-setting  meters  or  other  measuring  devices  on  the  premises  of  con- 
sumers, meter  shop  clerks,  employees  keeping  shop  records,  readjusting, 
painting,  replacing  worn  gears,  wearing  parts  and  dials,  testing  and 
repairing  old  meters,  repairing  and  replacing  connections,  meter 
fittings,  etc.,  meter  unions  and  cocks,  and  expenses  for  routine  tests, 
also  such  expenses  as  light,  fuel,  gas,  electricity  and  water  used  for 
operating  machinery  and  for  testing  in  this  department,  also  include 
inspection  and  testing  on  consumers'  premises  in  connection  with  com- 
plaints and  for  which  no  charge  is  made  by  the  utility. 

E-25.  STREET   DEPARTMENT   EXPENSES  AND   SUPPLIES. 

Charge  to  this  account  the  cost  of  labor  and  material,  inspecting  the 
distribution  system,  flushing  mains  and  hydrants,  pumping  out 


42  CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS. 

hydrants,  taking  street  pressure,  and  clerical  help  in  connection  there- 
with. 

E-26.  CUSTOMERS'  PREMISES  EXPENSES. 

Charge  this  account  with  all  labor  and  material  required  for  adjust- 
ing house  piping,  plumbing  and  water  fixtures,  investigating  reports 
of  poor  service  or  large  bills  including  inspection  and  testing  of  house 
plumbing,  labor  changing  meters  for  request  tests  and  inspecting  new 
plumbing;  also  carfare,  meals,  etc.,  of  employees  engaged  in  such  work. 

E-27.  MISCELLANEOUS  SUPPLIES  AND  EXPENSES  , 

Charge  to  this  account  the  cost  of  labor  in  transmission  and  distri- 
bution system  not  provided  for  in  any  of  the  preceding  accounts  all 
such  tools  as  are  not  properly  chargeable  to  plant  and  equipment  used 
by  the  street  department  employees ;  office  supplies  of  such  departments 
and  other  miscellaneous  distribution,  operating  supplies  and  expenses 
r.ot  elsewhere  provided. 

E-28.  REPAIRS  TO  TRANSMISSION  MAINS  AND  CANALS. 

Charge  to  this  account  the  cost  of  labor  and  material  incurred  in 
repairing,  changing  position  of  or  replacing  transmission  mains,  either 
pipes  or  canals,  between  the  pumping  station  or  other  source  of  supply 
and  the  distribution  reservoirs,  tanks,  etc. ;  this  account  to  include 
such  expense  as  seeking  and  repairing  leaks,  repairing  pipes  or  canals 
and  removing  and  replacing  worn  sections  and  fittings,  caulking, 
protecting  exposed  parts  of  undermined  mains,  digging  and  bracing 
in  connection  with  such  work,  repaving  and  repairing  manholes,  etc., 
together  with  all  material  and  supplies  consumed  in  thawing  pipes 
and  scraping  to  remove  incrustation. 

E-29.  REPAIRS  TO  RESERVOIRS,  TANKS  AND  STANDPIPES  . 

Charge  to  this  account  the  cost  of  labor  and  material  used  in  repair- 
ing distribution  reservoirs,  tanks,  and  standpipes.  This  includes  repair 
to  masonry  and  linings  due  to  settlement  of  underlying  material,  frost 
action  or  from  other  cause;  caulking  and  repairing  with  cement  grout- 
ing, asphalt  or  other  waterproof  material,  painting  and  caulking  stand- 
pipes  and  tanks,  replacing  small  parts  due  to  decay  or  excessive 
corrosion  or  electrolysis,  and  replacement  of  hoops,  repairs  to 
valves,  etc. 

E-30.  REPAIRS  TO  DISTRIBUTION  MAINS  AND  CANALS  . 

Charge  to  this  account  the  cost  of  labor  and  material  used  in  repair- 
ing, overhauling  or  changing  position  of  or  replacing  distribution 
mains,  either  pipes  or  canals.  This  includes  seeking  and  repairing 


CLASSIFICATION    OP   ACCOUNTS,   WATER   CORPORATIONS.  43 

,  repairs  to  pipes,  replacing  and  removing  worn  sections  and  fit- 
tings, caulking,  protecting  exposed  parts  of  undermined  mains,  repay- 
ing and  repairs  to  manholes,  the  cost  of  all  supplies  used,  and  expenses 
in  connection  with  thawing  such  mains  and  removing  incrustation. 

E-31.  REPAIRS  TO  SERVICES  . 

Charge  to  this  account  the  cost  of  labor  and  material  in  repairing, 
overhauling  and  changing  position  of  water  service  connections.  This 
includes  such  repairs  as  seeking  and  repairing  leaks,  cleaning  and 
scraping  out  service  pipes,  repairing  service  pipe  connections  to  meters, 
including  stop  cocks,  service  boxes,  changing  and  extending  old  service 
pipes  to  put  meters  in  better  location,  thawing  out  service  pipes, 
repairing  turnout  gates,  consumers'  laterals,  etc. 

E-32.  REPAIRS  TO  HYDRANTS. 

Charge  to  this  account  the  cost  of  labor  and  material  in  repairing 
hydrants.  This  includes  repairs  of  parts,  including  digging  and  filling 
in  connection  with  such  repairs,  painting,  protecting  exposed  parts 
of  undermined  hydrants  and  connections,  and  changing  location  of 
hydrants. 

E-33.  REPAIRS  TO  FOUNTAINS  AND  TROUGHS  . 

Charge  to  this  account  the  cost  of  labor  and  material  and  other 
expense  incurred  in  repairs  to  fountains  and  troughs.  This  includes 
renewal  of  worn-out  pipes,  valves,  painting,  digging  and  repaving  in 
connection  with  such  work. 

5.  COMMERCIAL  EXPENSES. 

E-34.  COLLECTIONS,  READING  METERS,  ETC. 

Charge  to  this  account  all  salaries  and  expenses  of  collection  depart- 
ment employees,  taking  application  for  water  service,  reading  meters, 
preparing,  delivering  and  collecting  bills  and  such  expenses  as  sta- 
tionery, stamps,  etc. ;  the  premium  on  surety  bonds  of  employees  of  the 
collection  department,  and  fees  and  commissions  paid  for  collecting 
bills. 

E-35.  PROMOTION  OF  BUSINESS,  SALARIES  AND  EXPENSES. 

Charge  to  this  account  all  salaries  and  expenses  of  all  employees 
whose  services  are  devoted  to  the  promotion  and  extension  of  business, 
including  canvassers,  solicitors,  demonstrators,  distributors  of  circulars 
and  advertising  matter,  al!  v:c:«*,.iisBnons  Pala  to  canvassers,  solicitors 
and  dealers  for  the  introduction  and  sale  of  water  appliances,  etc.,  and 
such  expenses  as  stationery  and  supplies,  advertising  in  newspapers 
and  periodical  posters,  dodgers,  handbills,  circulars,  etc. 


44  CLASSIFICATION  OF  ACCOUNTS,  WATER  CORPORATIONS. 

6.  GENERAL  AND  MISCELLANEOUS. 
K-'M.  SALARIES  OF  GENERAL  OFFICERS. 

Charge  to  this  account  all  salaries  of  the  chairman  of  the  board, 
president,  vice  president,  secretary,  treasurer,  comptroller,  auditor, 
chief  engineer,  general  manager,  assistant  general  manager,  general 
superintendent,  purchasing  agent,  and  all  other  officers  whose  jurisdic- 
tion extends  over  the  entire  water  utility  and  whose  services  can  not 
be  satisfactorily  distributed  to  specific  accounts  ;  also  fees  of  directors, 
fees  of  receivers  and  payments  to  engineering  corporations  for  super- 
vising and  managing  operations  of  the  utility. 

E-37.  SALARIES  OF  GENERAL  OFFICE  CLERKS. 

Charge  to  this  account  all  salaries  of  traveling  auditors,  bookkeepers, 
stenographers  and  other  general  office  clerks  whose  salaries  can  not  be 
satisfactorily  distributed  to  specific  accounts. 

Where  general  office  clerks  perform  services,  in  the  commercial,  new 
business,  or  other  departments  within  the  utility,  their  salaries  should 
be  apportioned  accordingly. 

E-38.  MISCELLANEOUS  GENERAL  OFFICE  SUPPLIES  AND  EXPENSES. 

Charge  to  this  account  the  cost  of  all  supplies  and  expenses  such  as 
messenger  and  janitor  service,  newspapers  and  periodicals,  directories, 
telegrams,  exchange  on  remittances,  books,  stationery  and  telephone, 
heating  of  general  offices,  etc.  ;  also  traveling  and  incidental  expenses  of 
general  officers  and  attendants. 

E-39.  LAM'  EXPENSES  —  GENERAL  . 

Charge  to  this  account  all  law  expenses  except  those  incurred  in 
connection  with  the  defense  and  settlement  of  injury  and  damage 
claims  ;  the  salaries  and  expenses  of  counsel-,  solicitors  and  general  attor- 
neys, their  clerks  and  attendants,  etc.  All  law  books,  printing  briefs, 
legal  forms,  testimony,  reports,  fees  and  retainers  of  general  counsel 
and  attorneys,  court  costs  and  payment  of  specific  notarial  and  witness 
fees,  expenses  of  taking  depositions,  and  other  general  law  and  court 
expenses.  Expenses  of  arbitrators  of  disputed  points  should  also  be 
charged  to  this  account. 


RAILROAD  COMMISSION  EXPENSES. 

Charge  to  this  account  all  fees  and  expenses  of  counsel,  solicitors, 
attorneys,  clerks,  attendants,  expert  witnesses,  and  others  whose  ser- 
vices are  secured  in  the  defense  and  prosecution  of  all  petitions  and 
other  transactions  before  the  Railroad  Commission  of  California. 

Expenses  which  are  made  necessary  by  rules,  regulations,  and  order 
of  the  Commission,  as  improvement  of  service,  additional  inspection, 


CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS.  45 

etc.,  will  not  be  charged  to  this  account  but  direct  to  department 
expense  account  affected. 

E-41.  INJURIES  AND  DAMAGES  . 

Charge  to  this  account  all  damages  to  or  destruction  of  property 
other  than  that  owned  by  the  corporation,  and  all  expenses  incident 
to  injury  or  death  to  employees,  and  other  persons  for  whose  injury 
or  death  the  corporation  is  held  liable,  or  in  the  settlement  of  which 
claim  allowances  are  made.  This  includes  judgment  for  damages, 
accident,  or  death,  and  plaintiff's  court  costs,  proportion  of  salaries 
and  expense  of  fees  of  physicians  and  surgeons,  expense  of  undertakers, 
nurses  and  hospital  attendants,  medical  and  surgical  appliances  and 
salaries  and  expenses  paid  to  disabled  employees,  salaries  and  expenses 
of  claim  agents,  adjusters  and  their  assistants;  the  compensation  of 
general  counsel  and  attorney  of  the  corporation,  and  other  attorneys 
while  engaged  in  the  defense  and  settlement  of  damage  suits. 

NOTE  A. — Corporations  arc  at  liberty  to  subdivide  this  account  to  show  the  following 
expenses : 

A.  INJURIES  TO  PERSONS. 

B.  DAMAGES  TO  PROPERTY. 

NOTE  B. — Where  such  subdivision  is  not  made,  the  account  should  be  so  kept  as  to 
admit  of  the  separation  over  two  such  subaccounts  when  called  for  by  the  Railroad 
Commission. 

E-42.  RELIEF  DEPARTMENT  AND  EXPENSES  . 

Charge  to  this  account  pensions  paid  to  retired  employees  or  repre- 
sentatives of  former  employees  and  expenses  in  connection  therewith, 
salaries  and  expenses  incurred  in  conducting  a  relief  department  and 
contributions  made  to  such  department. 

E-43.  WATER  FRANCHISE  REQUIREMENTS  . 

Charge  to  this  account  the  cost  of  all  service  and  materials  and  sup- 
plies furnished  to  municipal  corporations  in  compliance  with  franchise 
requirements  and  for  which  no  payment  is  received  by  the  corpora- 
tion; also  of  all  direct  expense,  such  as  paving  and  other  like  matters 
incurred  in  compliance  with  such  requirements  and  for  which  no 
reimbursement  is  received  by  the  corporation.  Amounts  charged  to 
this  account  for  which  there  is  no  direct  money  outlay  shall  be  credited 
to  Account  No.  E-47,  "Undistributed  Adjustments-Balance." 

p]-44.  OTHER  GENERAL  EXPENSES. 

Charge  to  this  account  such  incidental  general  expenses  as  are  not 
provided  for  in  the  foregoing  accounts,  such  as  cost  of  publishing  notice 
of  stockholders'  meetings,  election  of  directors,  annual  reports  in  news- 
papers, dividends  declared,  if  any,  and  fees  and  expenses  paid  to 
trustees. 


46  CLASSIFICATION    OF   ACCOUNTS,   WATER   CORPORATIONS. 

E-45.  INSURANCE. 

Charge  to  this  account  premiums  paid  to  insurance  companies  for 
fire,  fidelity,  boilers,  casualty,  burglary  and  all  other  insurance;  also 
amounts  set  aside  as  an  insurance  reserve  if  it  is  decided  to  open  such 
an  account. 

NOTE.  —  Premiums  on  surety  bonds  of  commercial  department  employees  should  be 
charged  \o  Account  No.  E-33,  "Collections,  Reading  Meters,  Etc." 

E-46.  REPAIRS  TO  GENERAL  STRUCTURES  . 

Charge  to  this  account  the  cost  of  repairing  all  buildings  and  other 
structures  of  a  permanent  character  devoted  to  general  purposes,  such 
as  general  office  buildings,  general  shop  buildings,  general  storehouse 
buildings,  general  stable.  buildings,  etc.  This  includes  such  repairs  as 
all  fixtures  attached  to  and  made  a  permanent  part  of  the  buildings, 
such  as  water  pipes  and  fixtures,  steam  pipes,  and  fixtures  for  warming 
and  ventilating,  gas  pipes,  electric  wiring,  elevators,  etc.,  and  the 
engines  and  motors  specially  provided  for  operating  them,  foundation 
for  machinery  and  apparatus  as  are  designed  to  be  as  permanent  as 
the  buildings  in  (or  in  connection  with)  which  they  are  constructed, 
and  to  outlast  the  first  machinery  installed  and  mounted  thereon. 

NOTE.  —  Where  general  offices,  shops,  stables,  etc.,  are  includible  In  buildings 
forming  a  part  of  the  pumping  or  distribution  system,  no  part  of  the  cost  of  repairs 
should  be  charged  to  this  account. 

E-47.  REPAIRS  OF  GENERAL  EQUIPMENT  . 

Charge  to  this  account  the  cost  of  repairing  all  equipment  of  general 
offices,  general  shops,  general  stores,  and  general  stables,  etc.  This 
includes  all  repairs  of  desks,  chairs,  tables,  filing  cases,  drafting  room 
equipment,  etc.,  and  of  shops  such  as  furnaces,  boilers,  engines,  machine 
tools,  smithing  equipment,  shafting,  belts,  etc.  ;  and  of  store  such  as 
movable  counters,  shelving  and  other  movable  equipment  of  like  nature, 
carts,  barrowrs,  trucks,  etc.,  and  other  apparatus  used  in  handling 
material,  and  of  stables  such  as  wagons,  harness,  automobiles,  bicycles, 
etc.,  shoeing  horses,  and  all  equipment  of  shoeing  shops. 

NOTE  A.  —  Counters,  shelving  and  the  like  which  are  permanently  attached  to  the 
structure  shall  be  charged  to  Account  No.  E-45,  "Repairs  to  General  Structures." 

NOTE  B.  —  The  accounting  corporation  may,  if  it  so  desires,  subdivide  the  account 
under  subaccounts,  as  under,  in  order  to  keep  record  of  cost  of  repairs  to  various 
clife-sts  of  equipment  : 

A.  General  Office  Equipment. 

B.  General  Shop  Equipment. 
O.  General  Store  Equipment. 

D.  General  Stable  and  Garage  Equipment. 


UNDISTRIBUTED  ADJUSTMENTS  —  BALANCE  . 
At  least  once  a  year  an  inventory  of  materials  and  supplies  and  of 
tools  shall  be  taken,  and  the  difference  between  the  inventories  and  the 
ledger  balances  shall  be  debited  or  credited  to  this  account  in  case  it  can 
not  be  assigned  to  specific  accounts  as  provided  under  Account  No.  9, 


CLASSIFICATION   OF   ACCOUNTS,   WATER    CORPORATIONS.  47 

"Materials  and  Supplies."  Credit  to  this  account  all  discounts 
recovered  through  the  prompt  payment  of  bills  for  material  and  sup- 
plies consumed  in  operation  unless  such  discounts  are  applied  to  the 
particular  bills;  also  amounts  included  in  expenses,  as  provided  in 
Account  No.  E-42,  "Water  Franchise  Requirements." 

E-49.  EXTRAORDINARY  REPAIRS  . 

When  the  property  of  the  utility  is  damaged  by  floods,  earthquakes, 
fire  (if  not  recoverable  under  insurance)  or  other  casualty  of  an  extra- 
ordinary nature,  the  cost  of  repairing  such  damage  must  be  charged 
to  this  account  and  not  to  ordinary  repair  accounts.  The  account  will 
be  credited  with 

(1)  The  salvage  or  scrap  value,  if  any,  of  the  damaged  property. 

(2)  The  amount  of  depreciation  that  had  been  accrued  on  such 
property  prior  to  the  damage,  which  amount  will,  of  course,  be 
debited  to  Account  No.  29,  "Reserve  for  Accrued  Depreciation." 

If  the  amount  of  such  damage  or  loss  is  considered  too  large  to  be 
charged  off  in  one  year,  the  utility  should  apply  to  the  Commission  by 
letter  or  otherwise  for  authority  to  set  up  an  "Extraordinary  Repair 
Suspense  Account"  to  which  account  will  be  charged  the  cost  of  repair- 
ing the  damage  less  salvage,  etc.,  and  the  amount  so  charged  will  be 
amortized  over  a  given  period  by  crediting  "Extraordinary  Repairs 
Suspense  Account"  and  concurrently  debiting  this  account. 

E-50.  TAXES. 

This  account  should  be  charged  (account  "Taxes  Accrued"  being 
credited)  regular  monthly  installments  sufficient  to  cover  all  taxes 
imposed  by  lawful  authority. 

A.  Upon  property  real,  personal  and  mixed  (except  assessments  for 
betterment  to  real  estate,  which  should  be  charged  to  account  benefited.) 

B.  Upon  earnings  in  addition  to  or  in  lieu  of  taxes  upon  property. 

C.  All  specific  licenses  or  charges  levied  upon  the  corporation  based 
upon  or  with  respect  to  its  capital  stock,  property  or  business. 

D.  The  value  of  all  discounts  allowed  or  services  rendered  in  lieu  of 
taxes. 

NOTE. — The  amount  of  taxes  accrued  during  any  month  shall,  when  the  levy  is 
unVnowi'.  te  eslimated,  and  when  tho  levy  is  finally  determined  the  estimate  shall  be 
corrected  in  the  provision  for  taxes  during  the  remainder  of  the  year.  For  example, 
if  at  the  beginning  of  the  tax  year  the  taxes  against  the  corporation  are  estimated  to 
be  $600  for  the  year,  the  estimated  monthly  charge  will  be  $50.  If  during  the  fifth 
month  it  is  found  that  the  levy  is  $640,  adjustment  should  be  made  and  a  charge  of 
$55  per  month  made  to  "Taxes"  for  the  remaining  eight  months  of  the  tax  year. 


48  CLASSIFICATION   OP  ACCOUNTS,   WATER   CORPORATIONS. 

GENERAL  AMORTIZATION   OF  CAPITAL. 

E-51.  AMORTIZATION  OP  FRANCHISES  AND  PATENTS  . 

Charge  to  this  account  each  month  the  amount  necessary  to  cover 
such  portion  of  the  life  of  franchises  and  patents  as  has  expired  or 
been  consumed  during  the  month.  The  amount  so  charged  shall  be 
concurrently  credited  to  an  appropriate  sub-account  under  Account 
No.  30,  "Reserve  for  Amortization  of  Intangible  Capital." 

NOTE. — The  amount  so  charged  to  this  account  shall  be  based  upon  a  rule  deter- 
mined by  the  accounting  corporation  and  filed  with  the  'Railroad  Commission.  The 
purpose  and  effect  of  such  rule  should  be  to  accumulate  by  charges  equitably 
distributed  throughout  the  life  of  any  franchise  or  patent,  a  reserve  that  will,  at  the 
expiration  of  its  life,  equal  the  original  cost. 

E-52.  DEPRECIATION  OF  PLANT  AND  EQUIPMENT. 

Charge  to  this  account  the  amount  estimated  to  be  necessary  to  cover 
the  depreciation  accruing  in  the  corporation's  tangible  capital.  The 
amount  charged  to  this  account  shall  be  concurrently  credited  to 
account,  "Reserve  for  Accrued  Depreciation." 

NOTE. — Charges  to  above  depreciation  account  should  be  reported  separately  under 
the  following  subheads : 

A.  Depreciation  on  Source  of  Water  Supply. 

B.  Depreciation  on  Pumping  Equipment. 

C.  Depreciation  on  Transmission  and  Distribution  System. 

D.  Depreciation  on  General  Capital. 

CLEARING  ACCOUNTS. 

(Not  required  of  Class  B  and  C  corporations.) 

The  following  accounts  are  provided  for  certain  expenses  which 
usually  affect  several  classes  of  operations  but  need  to  be  brought 
together  in  one  account  in  order  that  the  total  of  the  expenses  may  be 
known  and  properly  distributed. 

An  inventory  of  tools,  harness,  vehicles,  and  other  materials  and 
supplies  in  shops,  stores,  stables  and  garages  shall  be  taken  at  least 
once  a  year,  and  any  loss  disclosed  by  such  inventory  in  excess  of  the 
amount  taken  into  account  through  the  depreciation  currently  charged 
out  should  be  apportioned  to  the  appropriate  expense  accounts  on  the 
basis  of  charges  made  since  last  inventory. 

1.  Shop  Expense.  This  account  or  appropriate  sub-accounts  should 
be  arranged  so  as  to  record  separately  the  expenses  of  the  general  shops 
as  follows:  (1)  Salary  and  wages  of  shop  employees;  (2)  personal  and 
incidental  expenses  of  such  employees;  (3)  materials  and  supplies  for 
general  shop  use;  (4)  repairs  of  tools,  machinery  and  appliances; 
(5)  rent  of  shop  buildings;  (6)  depreciation  of  tools,  machinery  and 
appliances. 

The  shop  expense  account  should  be  cleared  by  apportioning  the  total 
amount  of  expenses  to  the  various  jobs  on  an  equitable  basis. 


CLASSIFICATION   OF   ACCOUNTS,   WATER    CORPORATIONS.  49 

2.  Stable  and  Garage  Expense.     This  account  or  appropriate  sub- 
accounts  should  be  arranged  so  as  to  record  separately  the  expenses  of 
stables  and  garages  as  follows:    (1)    Salaries  and  wages  of  drivers, 
chauffeurs,  stablemen,  garagemen  and  other  employees  in  stables  and 
garages;    (2)    personal  and  incidental  expenses  of  such   employees; 
(3)  materials  and  supplies,  including  fuel  and  gasoline,  harness,  tires, 
and  other  supplies  for  stables  and  garages ;  (4)  repairs  of  automobiles 
and  other  vehicles   and  harness;    (5)    rent  of  buildings  or  vehicles; 
(6)  depreciation  on  vehicles,  horses,  harness,  etc. 

Credit  to  this  account  any  charges  for  service  performed  for  others. 

A  record  should  be  kept  of  the  use  of  teams  and  automobiles,  and 
the  total  expense  should  be  apportioned  to  the  proper  accounts  accord- 
ing to  use,  or  the  debits  to  the  expense  accounts  may  be  made  at  rates 
per  hour  of  service  which  have  been  found  to  be  fair  and  to  distribute 
the  total  expense  equitably. 

3.  Tool   Expense.     Charge   to   this    account   all   expense   for   tools 
(except  shop  tools  carried  as  supplies  unissued).     It  includes  the  cost 
of  small  hand  tools  of  which  no  account  is  kept  after  issue ;  the  cost  of 
repairing  tools ;  the  cost  of  tools  lost  or  stolen,  and  depreciation  on  tools 
taken  out  of  service  because  of  breakage  or  other  deterioration. 

This  account  should  be  cleared  by  charging  repairs  and  cost  of  plant 
installed  such  amounts  as  will  equitably  distribute  the  total  expense 
for  tools. 

4.  Supply  Expense.     Charge  to  this  account  or  to  appropriate  sub- 
accounts  all  expenses  (except  insurance  and  taxes)  incurred  directly  in 
connection  with  the  purchase,  storage,  handling  and  distribution  of 
materials  and  supplies  and  stationery.     It  includes  the  pay  and  expenses 
of  purchasing  agents,  managers  of  stores,  clerks  and  laborers;  rents  of 
stores,  cost  of  lighting,  heating  and  undistributed  freight  and  express 
charges,  and  the  estimated  depreciation  on  supplies  due  to  breakage, 
leakage,  shortage  and  wear  and  tear.     This  account  should  be  cleared 
by  adding  to  the  cost  of  materials  and  supplies  passing  through  stores 
a  suitable  loading  charge  which  will  equitably  distribute  the  total  cost 
of  conducting  the  stores,  and  by  adding  to  the  cost  of  such  supplies  as 
are  bought  by  the  purchasing  department  pro  rata  share  of  the  total 
expenses  of  the  purchasing  department. 

5.  Engineering  Expense.     Charge  to  this  account  or  appropriate  sub- 
accounts  all  expenses  for  engineering  so  as  to  show  separately  the  follow- 
ing: (1)  Salaries  and  wages;  (2)  personal  and  incidental  expenses  of 
engineering  department  employees ;  (3)  rent  of  office  and  office  expenses. 

This  account  should  be  cleared  by  apportioning  the  total  expenses  to 
operating  expense  and  fixed  capital  accounts  on  the  basis  of  service 


50  CLASSIFICATION   OF  ACCOUNTS,   WATER   CORPORATIONS. 

rendered,  as  determined  by  the  actual  time  devoted  to  particular  jobs 
on  an  equitable  basis  fixed  by  the  officers  of  the  corporation. 

6.  Plant  Supervision  Expense.  Charge  to  this  account  the  cost  of 
general  supervision  of  the  maintenance  and  construction  of  the  plant 
where  a  separate  department  of  the  corporation's  organization  is  charged 
with  such  supervision.  It  includes  the  pay  and  expenses  of  the  plant 
supervising  officers,  sucli  as  the  general  plant  superintendent,  district 
plant  superintendent,  plant  engineers  and  their  office  and  field  forces, 
charged  with  planning  for  and  superintending  the  work  of  maintenance 
and  plant  construction. 

The  account  or  appropriate  sub-accounts  should  be  so  arranged  as  to 
show  in  detail  the  expenses  of  the  plant  supervision  department  as' 
follows:  (1)  Salaries  and  wages;  (2)  personal  and  incidental  expenses 
of  employees;  (3)  rent  of  offices  and  office  expenses. 

This  account  should  be  cleared  by  charging  directly  to  the  appro- 
priate accounts  such  expenses  as  can  be  allocated  to  particular  pieces 
of  work  and  by  charging  out  the  balance  on  the  basis  of  labor  employed 
in  all  construction  or  maintenance  work  in  progress.  Charges  to  con- 
struction should  be  to  Account  C.  25  E — Miscellaneous  Construction 
Expenditures. 

NOTE. — The  pay  of  general  foremen  and  foremen  in  direct  charge  of  jobs  should 
be  included  in  the  cost  of  the  job  and  not  charged  to  this  account. 

s 

Every  water  corporation  shall  include  in  its  expenses  depreciation 
charges  for  the  purpose  of  creating  proper  and  adequate  reserves  to 
cover  the  expenses  of  depreciation  currently  accruing  in  its  fixed  capital, 
and  for  that  purpose  three  accounts  are  provided  for  the  expense  of 
depreciation  as  above:  Account  No.  E-52,  "Depreciation  of  Plant  and 
Equipment";  Account  No.  E— 49,  "Extraordinary  Repairs";  Account 
No.  E-51,  Amortization  of  Franchises  and  Patents." 

By  "Expense  of  Depreciation"  is  meant  the  loss  suffered  through 
the  current  lessening  in  value  of  tangible  property  from  wear  and  tear, 
decay,  obsolescence,  or  inadequacy  resulting  from  use,  age,  physical 
change  or  supersession  by  reason  of  new  inventions  and  discoveries, 
changes  in  popular  demand,  or  public  requirements ;  also  losses  suffered 
through  destruction  of  property  by  extraordinary  casualties  and 
decreases  in  the  values  of  intangible  property  through  lapse  of  time. 

The  amount  charged  as  expense  of  depreciation  shall  be  based  upon 
values  determined  by  the  accounting  corporation.  Such  rules  may  be 
devised  from  a  consideration  of  the  corporation 's  history  and  experience. 
Whatever  may  be  the  basis,  the  rules  and  a  sworn  statement  of  the  facts 


CLASSIFICATION    OF   ACCOUNTS,   WATER    CORPORATIONS.  51 

and  expert  opinions  and  estimates  upon  which  they  are  based  shall  be 
filed  with  the  Railroad  Commission.  Each  amendment  of  any  rule, 
together  with  statements  and  opinions,  shall  be  also  filed  with  the  Rail- 
road Commission,  before  they  are  put  into  effect  by  the  accounting 
corporation,  and  shall  show  the  date  when  they  are  to  become  effective. 


WATER  CORPORATIONS. 


List  of  Accounts.    Balance  Sheet  Accounts. 

ASSET  ACCOUNTS. 

PAGE. 

1.  Fixed  capital  installed  prior  to  January  1,  1913 6 

2.  Fixed  capital  installed  since  December  31,  1912 7 

3.  Cash  and  deposits 7 

A.  Cash 7 

B.  Special  deposits 7 

4.  Notes    receivable   7 

5.  Accounts   receivable   7 

A.  Accounts   with  .system   corporations 7 

B.  Due  from  consumers  and  agents 8 

C.  Miscellaneous  accounts  receivable 8 

6.  Interest  and  dividends  receivable 8 

7.  Other  current  assets 8 

8.  Investments    8 

A.  Securities  of   other  corporations 8 

B.  Advances    to    system    corporations    for    construction,    equipment    and 

betterments 9 

C.  Miscellaneous  investments   9 

9.  Materials   and   supplies 9 

10.  Sinking   funds 10 

11.  Other  special   funds 10 

12.  Treasury  securities 10 

13.  Prepaid  expenses ' 10 

A.  Prepaid  rents 10 

B.  Prepaid  taxes 10 

C.  Prepaid  insurance 11 

D.  Other  prepayments 11 

14.  Unamortized  discount  on  securities  and  expenses 11 

15.  Other  suspense 11 

16.  Construction   work   in    progress 12 

17.  Corporate  deficit 12 

LIABILITY  ACCOUNTS. 

IS.  Capital  stock 12 

19.  Installments  on  stock  subscription 12 

20.  Funded  debt 12 

21.  Receiver's  certificates 12 

22.  Advances  from  system  corporations  for  construction,  equipment  and  better- 

ments   13 

23.  Notes  payable   13 

24.  Accounts  payable   13 

A.  Accounts   with   system   corporations--  13 

B.  Audited  vouchers  and  wages  unpaid 13 

C.  Consumer's   deposits  13 

D.  Miscellaneous  accounts  payable 14 

25.  Interest   accrued   14 

20.  Taxes  accrued  14 

27.  Dividends  declared   14 

28.  Service  billed  in  advance 14 

29.  Reserve  for  accrued  depreciation 14 


54  CLASSIFICATION  OP  ACCOUNTS,  WATER  CORPORATIONS. 

PAGE 

30.  Reserve  for  amortization  of  intangible  capital 1."» 

31.  Unainortized  premium  oil  debt 15 

32.  Casualty  and  insurance  reserves 1C 

33.  Income  invested  since  December  .">!.  I'.HJ,  in  fixed  capital 1C 

34.  Reserves  invested  in  sinking  funds 1C 

35.  Other  reserves  from  income  or  surplus 16 

3G.  Corporate  surplus  unappropriated , 17 

CAPITAL  EXPENDITURES. 

Intangible  and  Tangible  Capital. 

FIXED  CAPITAL  ACCOUNTS. 
Intangible  Capital. 

C— 1.  Organization 1_  17 

'C-2.  Franchises  and  water  rights 18 

C-3.  Patent  rights 18 

C-4.  Other  intangible  capital 18 

Tangible  Capital. 

C— 5.  Landed  capital  19 

C-6.  Buildings,  structures  and  grounds 19 

A.  Source  of  water  supply,  buildings  and  fixtures 20 

B.  Pumping  station  buildings  and  fixtures 20 

C.  Purification  buildings  and  fixtures 20 

D.  General  office  and  other  buildings  and  fixtures 20 

SOURCE  OF  WATER  SUPPLY. 

C  -  7.  Impounding  dams  and  reservoirs 20 

C-   8.  Lake  and  river  cribs 20 

C--  9.  Intake  and  suction  mains 20 

C-10.  Wells    21 

C_ll.  Springs  and  infiltration   galleries 21 

C-12.  Collecting  reservoirs  and  intake  wells 21 

C-13.  Canals  and  conduits 21 

PUMPING  STATION  EQUIPMENT. 

C-14.  Pumping  equipment 21 

C— 15.  Miscellaneous  pumping  station  equipment 22 

PURIFICATION   CAPITAL. 

C-16.  Purification  system 22 

TRANSMISSION   AND   DISTRIBUTION   CAPITAL. 

C-17.  Transmission   mains   or   canals 22 

C— 18.  Distribution  mains  or  canals 22 

C— 19.  Distribution  reservoirs,  tanks  and  standpipes 23 

C-20.  Hydrants,  fire  cisterns,  fountains,  etc 23 

C-21.  Services    23 

C-22.  Meters  and  measuring  devices 23 

C_23.  "Miscellaneous  distribution  equipment — _ 24 

GENERAL  CAPITAL. 

C-24.  General  equipment 

A.  General  office  equipment 24 

B.  General  shop  equipment 24 

C.  General  store  equipment 24 

D.  General  stable  and  garage  equipment 24 


INDEX.  55 

PAGE 

O-  25.  Undistributed  construction  expenditures . 24 

A.  Engineering  and  superintendence 25 

R.  Law  expenditures   during  construction 25 

C.  Injuries  and  damages  during  construction 25 

D.  Taxes  during  construction 25 

E.  Miscellaneous  construction  expenditures 25 

C-245.   Interest  during  Construction 20 

G-27.  Cost  of  plant  purchased  in  lieu  of  plant  constructed 26 

C-28.  Fixed  capital  installed  prior  to  January  1,  191S 26 

C-29.  Fixed  capital  installed  since  December  31,  1912 27 

INCOME  ACCOUNT. 

101.  Operating  revenues 27 

102.  Operating    expenses    : 28 

103.  Uncollectible  water  bills 28 

104.  Non-operating  revenues  28 

A.  Rents  from  buildings,  land  and  apparatus — 28 

B.  Interest  and  dividend  revenues 28 

C.  Sinking  and  other  reserve  fund  accretions 1 28 

D.  Miscellaneous  non-operating  revenues 29 

105.  Non-operating  revenues  and  deductions 29 

A.  Rent  expenses ; 29 

B.  Interest  expenses 29 

O.  Dividend  expenses   29 

D.  Others'  operations  expenses ; 29 

E.  Miscellaneous  non-operating  expenses 29 

F.  Non-operating  taxes 29 

G.  Uncollectible  non-operating  revenues 29 

106.  Interest  accrued  on  funded  debt 30 

107.  Other  interest  deductions 30 

108.  Rent  deductions 30 

A.  Rent  for  lease  of  other  water  plant 30 

B.  Miscellaneous  rent  deductions 30 

109.  Amortization  of  debt  discount  and  expense 30 

110.  Amortization  of  premium  on  debt-credit 31 

111.  Miscellaneous  deductions  from  income 31 

A.  Loss'  on  operations  of  others 31 

B.  Amortization  of  landed  capital 31 

C.  Other  contractual  deductions  from  income 31 

CORPORATE   SURPLUS  OR    DEFICIT  ACCOUNT. 

112.  Dividends  on  outstanding  stock • 32 

113.  Sinking    fund    appropriations 32 

114.  Miscellaneous  deductions  from  surplus 32 

A.  Expenses  unprovided  for  elsewhere 32 

B.  Realized  depreciation  not  covered  by  reserves 33 

C.  Amortization  unprovided  for  elsewhere 33 

D.  Gifts  to  controlled  corporations 33 

E.  Appropriations    to    reserves 33 

F.  Other  appropriations  from  surplus 33 

G.  Other  deductions  from  surplus 33 

115.  Miscellaneous  additions  to  surplus 33 


56  CLASSIFICATION  OP  ACCOUNTS,  WATER  CORPORATIONS. 

OPERATING   REVENUES— WATER.  PAOB 

R-l.  Earnings  from  commercial  sales ' 34 

A.  Commercial  earnings — flat  rate ^_  34 

B.  Commercial  earnings — metered  34 

R-2.  Earnings  from  industrial  sales 34 

A.  Earnings  from  industrial  sales — flat  rate 35 

B.  Earnings  from  industrial  sales — metered 35 

R-3.  Earnings  from  municipal  hydrant  rentals '. 35 

R-4.  Earnings  from  sale  for  street  sprinkling 35 

R-S.  Earnings  from  sales  to  municipal  departments 35 

R-6.  Earnings  from  sales  for  irrigation 35 

R-7.  Miscellaneous  earnings  from  operations 35 

OTHER  OPERATING  REVENUES. 

R-8.  Profit  on  merchandise  sales 35 

R-9.  Profit  on  piping  and  connections , 36 

OPERATING   EXPENSES. 

1.  Source  of  Water  Supply. 

E-  1.  Superintendence    37 

E-  2.  Operating  labor 37 

E-   3.  Operating  supplies  and  expenses 38 

E—  4.  Water  purchased  for  re-sale 38 

E—  5.  Repairs  to  water  supply  buildings  and  fixtures 38 

E_  6.  Repairs  to  surface  source  of  supply  facilities 38 

E-  7.  Repairs  to  ground  source  of  water  supply 38 

2.  Pumping. 

E—  8.  Superintendence    38 

E-  9.  Pumping  labor _i 39 

E-10.  Miscellaneous  labor '. 39 

E-ll.  Fuel  for  steam 39 

E-12,  Power  purchased 39 

E-13    Lubricants,  etc. 39 

E-14.  Miscellaneous  pumping  station  supplies  and  expenses 39 

E-15.  Repairs  to  primary  pumping  equipment 39 

E-16.  Repairs  to  boilers  and  boiler  plant  equipment 40 

E— 17.  Repairs  to  miscellaneous  pumping  station  equipment 40 

E-18.  Repairs  to  pumping  station  buildings,  fixtures  and  grounds 40 

3.  Purification. 

E-19.  Purification  labor 40 

E-20.  Purification  supplies  and  expenses 40 

E— 21.  Repairs  to  purification  plant  and  structures 41 

4.  Transmission  and  Distribution. 

E-22.  Superintendence    41 

E-23.  Patrolling  storage  facilities 41 

E-24.  Meter  and  fittings,  department  expenses  and  supplies 41 

E-25.  Street  department  expenses  and  supplies 41 

E— 26.  Customers'  premises  expenses 42 

E-27.  Miscellaneous  supplies  and  expenses 42 

E-28.  Repairs  to  transmission  mains  and  canals 42 

E— 29.  Repairs  to  reservoirs,  tanks  and  standpipes 42 

E-30.  Repairs  to  distribution  mains  and  canals 42 

E-31.  Repairs   to  services 43 

E-32.  Repairs  to  hydrants 43 

E-33.  Repairs  to  fountains  and  troughs 43 


INDEX.  57 

5.  Commercial   Expenses.  PAGE 

E-34.  Collections,  reading  meters,  etc 43 

E-35.  Promotion  of  business,  salaries  and  expenses 43 

6.  General  and  Miscellaneous. 

E-36.  Salaries  of  general  officers 44 

K-37.  Salaries  of  general  office  clerks 44 

E-38.  Miscellaneous  general  office  supplies  and  expenses 44 

E-39.  Law  expense — general 44 

E— 40.  Railroad  Commission  expenses 44 

E— 41.  Injuries  and  damages 45 

E-42.  Relief  department  and  expenses 45 

E-43.  Water  franchise  requirements 45 

E-44.  Other  general  expenses 45 

E-45.  Insurance 46 

E^MJ.  Repairs  to  general  structures 46 

E-47.  Repairs  to  general  equipment 46 

E-^8.  Undistributed  adjustments — Balance 46 

E-49.  Extraordinary  repairs 47 

E-50.  Taxes    47 

GENERAL  AMORTIZATION   OF  CAPITAL. 

E-51.  Amortization  of  franchises  and  patents 48 

E-52.  Depreciation  of  plant  and  equipment 48 

CLEARING  ACCOUNTS. 

3.  Shop  expense 48 

2.  Stable  and  garage  expense 49 

3.  Tool   expense 49 

4.  Supply   expense 49 

5.  Engineering  expense 49 

(5.  Plant  supervision  expense 50 


48885    10-19    3500 


CLASS  B  WATER  CORPORATIONS  MAY  CONSOLIDATE  THEIR 
OPERATING  EXPENSE  ACCOUNTS  AS  FOLLOWS: 


ACCOUNT 


NAME 


E-l   to  E-3 

E-4 

E-5 

E-6   to  E-7 

E-8  to  E-10 
E-ll  to  E-12 
E-13  to  E-14 
E-15  to  E-17 
E-18 


E-19  to  TS-20 
E-21 


E-22 
E-28 

E-31 

E-34 
E-36 

E-39 
E-40 
E-41 
E-42 
1-45 
E-46 


to  E-27 
to  E-30 

to  E-33 
to  E-35 
to  E-38 


to  E-44 
to  E-47 
to  E-49 


E-48 
E-50 
E-51  to  E-52 


SOURCE  OF  WATER  SUPPLY 
Operating  Labor  and  Expenses 
Water  Purchased  for  Re-sale 
Repairs  to  Water  Supply  Buildings  and 

Fixtures 
Repairs  to  Source  of  Supply 

PUMPING 
Pumping  Labor 
Fuel  and  Power-  Purchased 
Pumping  Station  Supplies  and  Expenses 
Repairs  to  Pumping  Station  Equipment 
Repairs  to  Pumping  Station  Buildings, 

Fixtures  and  Grounds 
PURIFICATION 

Purification  Labor .Supplies  and  Expenses 
Repairs  to  Purification  Plant  and 

Structures 

TRANSMISSION  AND  DISTRIBUTION 
Operating  Labor  and  Expenses 
Repairs  to  Transmission  and  Distribution 

System 
Repairs  to  Services 

COMMERCIAL 
Collection  and  Promotion  of  Business 

GENERAL  AND  MISCELLANEOUS 
General  Officers'  and  Clerks'  Salaries 

and  Expenses 
Law  Expenses-General 
Railroad  Commission  Expense 
Injuries  and  Damages 
Miscellaneous  General  Expenses 
Insurance 

Repairs  of  General  Structures  and  Equip- 
ment 
Extraordinary  Repairs,  etc. 

TAXES 
Taxes 

GENERAL  AMORTIZATION  OF  CAPITAL 
Depreciation,  etc 


CLASS  C  WATER  CORPORATIONS  MAY  CONSOLIDATE  THEIR 
OPERATING  EXPENSE  ACCOUNTS  AS  FOLLOWS: 


ACCOUNT 


NAME 


E-l   to  E-7    Source  of  Water  Supply 

E-8  to  E-18   Pumping 

E-19  to  E-21   Purification 

E-22  to  E-27   Operating  Transmission  and  Distribution 

System 
Repairs  to  Transmission  and  Distribution 

System 

E-34  to  E-35   Commercial 
E-36  to  E-49   General  and  Miscellaneous 
ifi-50          Taxes 
E-51  to  E-52  ;  Depreciation 


27 
E-28  to  E-33 


RAILROAD  COMMISSION  OF  THE  STATE  OF  CALIFORNIA 


CLASSIFICATION   OF  ACCOUNTS 

To  ALL  GAS,  WATER  AND  ELECTRIC  CORPORATIONS: 

The  Railroad  Commission  at  a  meeting  held  on  April  7,  1922,  ordered 
that  from  and  after  July  1,  1922,  the  uniform  classification  of  accounts 
for  gas  and  electric  corporations,  effective  January  1,  1913,  and  the 
uniform  classification  of  accounts  for  water  corporations  effective 
January  1,  1920,  be  modified  by  adding  thereto  the  following  balance 
sheet  accounts: 

28a.     Consumers'  Advances  for  Construction. 

To  this  account  should  be  credited  cash  advanced  by  consumers 
to  cover  the  cost  of  extensions  or  for  other  specific  purposes,  in 
cases  where  such  amounts  are  to  be  refunded  in  whole  or  in  part. 
Separate  sub-accounts  should  be  maintained  for  each  contribution. 

After  the  consumer  has  been  refunded  the  entire  amount  to 
which  he  is  entitled  under  the  agreement  or  rule,  the  balance,  if 
any,  as  shown  by  the  sub-account,  shall  be  transferred  to  account 
28b  "Donations  in  Aid  of  Construction." 

28b.     Donations  in   Aid  of  Construction. 

To  this  account  shall  be  credited  cash  or  other  property  donated 
by  municipalities,  individuals  or  others  where  there  is  no  agree- 
ment for  refund  in  whole  or  in  part. 

If  the  donation  is  made  in  any  form  other  than  cash  the  amount 
to  be  credited  to  this  account  and  concurrently  debited  to  appro- 
priate fixed  capital  account,  shall  be  its  money  value,  estimated 
if  not  known,  at  date  acquired. 

Separate  sub-accounts  shall  be  maintained  for  each  donation 
which  shall  give  particulars  as  follows : 
(a)  Name  of  donor  and  amount  received; 
(6)  Purpose  or  purposes  for  which  donations  were  made. 

NOTE. — Property  donated  and  the  cost  of  extensions  made  with  funds  received 
as  donations  shall  be  charged  to  appropriate  fixed  capital  accounts  in  the  same 
manner  as  property  acquired  by  purchase  or  extensions  constructed  with  the 
utility's  own  funds. 

BY  ORDER  OF  THE 

RAILROAD  COMMISSION  OF  THE 

STATE  OF  CALIFORNIA, 

H.  G.  MATHEWSON,  Secretary. 

19396     6-22     2M 


RAILROAD  COMMISSION  OF  THE  STATE  OF  CALIFORNIA 

April  7,  1922. 

To  ALL  GAS,  WATER  AND  ELECTRIC  CORPORATIONS: 

From  and  after  the  date  hereof,  gas,  water  and  electric  corporations 
will  not  be  required  to  keep  separate  income  or  profit  and  loss  accounts, 
for  each  incorporated  city  in  which  they  operate,  nor  a  single  income 
or  profit  and  loss  account  for  all  territory  not  within  an  incorporated 
city,  nor  will  they  be  required  to  pro  rate  their  expenses  to  the  several 
incorporated  cities  or  other  territory,  all  as  directed  by  the  Commis- 
sion's orders  of  October  24,  1912,  and  October  25,  1912. 

From  and  after  the  date  hereof,  all  gas,  water  and  electric  corpora- 
tions must  keep  their  records  of  operating  revenues  in  such  a  manner 
as  will  enable  them  to  report  to  the  Commission  their  operating  revenues 
from  business  done  in  each  municipality  and  their  operating  revenues 
from  business  done  in  unincorporated  territory. 


H.  G.  MATHEWSON,  Secretary. 


IU397     6-22     2M 


Form  L9-32m-8,'58(5876s4)444 


University  of  California 
4,  CalifomU 


UCLA-GSM  Library 

HF  5686  W3C1 


